4 July 2018
ASIC’s Report on Credit Card Lending in Australia
Australians use credit cards for a wide range of reasons, from paying for that overseas holiday to helping spread out payments and reduce financial stress when several bills come in at once.
The banking industry is committed to ensuring credit cards deliver tangible benefits without saddling customers with a debt they are unable to repay.
Banks are always willing to engage with customers struggling with long term debt and offer a range of low fee, low interest credit card products with generous interest free periods.
With over 190 credit cards on the market, some with interest rates as low as 10%, consumers should always shop around and get the product that best suits their needs.
Close to one third of cards on the market have an interest rate under 14%, with many having additional features such as a long interest free period.
Further to this recent data shows that Australians are becoming savvier with how they use their card, with repayments outstripping spending and the amount on which interest is accrued close to a record low of approximately 62%.
ASIC’s Report on Credit Card Lending in Australia has not identified widespread non-compliance with responsible lending requirements, however it is clearly a call for the industry to do even more when it comes to helping customers with long term credit card debt.
This report is a signal to the industry that it needs to be more proactive when issuing credit cards to address persistent debt, low repayments and products that are not suited to the customer.
The industry’s new Banking Code of Practice, currently before ASIC for approval, specifically addresses some of the concerns raised by the regulator, such as contacting customers when their promotional period for a balance transfer is ending.
Banks take their duty for responsible lending seriously and will work with ASIC on formulating stronger guidelines on the amount a customer can borrow that is dependent on their ability to repay.
Contact: Rory Grant 0475 741 007