ASIC’s review into credit card lending has identified that 1 in 6 people are struggling with Credit Card Debt. 930,000 people have persistent debt with $550,000 in arrears on their credit card repayments. Deputy Chair of ASIC, Peter Kell, states that the report ‘confirms that credit cards may cause financial difficulty for many Australian consumers’.
They also identify that many people have inappropriate credit cards. For example, many people are carrying a significant balance on a high-interest credit card when a low-interest credit card would be more suitable. In 2016-17, consumers would have saved $621 million in interest if they had carried their balances on low-interest cards.
The report found only a handful of credit providers take active steps to help people reduce their credit card debt. You would think that balance transfers would be a good option but ASIC also found that balance transfers did not, in general, help people. Over 30% of consumers increased their debt by 10% or more after transferring a balance, and 15.7% increased their debt by 50% or more.
Credit Cards Facts
● There are 14 million credit cards open
● There is $45 billion owing
● $31.7 billion has interest constantly accruing
● $1.5 billion is paid in fees annually
● 38% of people with credit cards have more than one
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