Credit Card credit limits to be subject to responsible lending requirements
The recent Senate Inquiry into credit cards found that too many Australians are trapped by long-term credit card debt. Almost half the callers to our financial counselling hotline with credit card debt have debts more than $10,000, and one in 10 are more than $50,000. An average of one person a week reports debt exceeding $100,000 and usually juggles at least 5 cards.
Credit cards are supposed to offer convenience and some short-term credit, but they are not appropriate for long-term debt. To reduce the likelihood that families and individuals will be burdened by high interest repayments, credit card providers should be required to assess whether applicants can afford to repay the entire credit limit within 3 years. If a shorter ‘teaser’ interest rate applies (for example, balance transfer cards), the period should be the same as the ‘teaser’ period.
Policy contact: Zac Gillam: 03 9670 5088 – firstname.lastname@example.org
Media contact: Jonathan Brown: 0413 299 567 – email@example.com