Changes to Credit Cards Rules and Minimum Payments
There have been changes to the credit card rules as the Government tries to tackle the increasing levels of personal debt.
The current Government is proposing four reforms:
- Assessing applications on the basis of being able to pay off the debt in a reasonable time frame rather than minimum payments;
- Extending banning unsolicited offers to include electronic or over the phone offers (currently the ban is of unsolicited written offers of credit limit increases);
- Interest to be calculated on outstanding amount from the end of the statement period and not the date of purchase;
- Provide online options to either cancel credit cards or reduce the limit.
While these reforms are positive, in my opinion, the mandatory increasing of the level of minimum repayments, as the first reform does, does not go far enough to help those credit holders who for whatever reason only make the minimum payment. The time it takes to pay off a credit card under the current rules could be up to 30 years + depending on the credit card limit and the interest rate.
What is the point of a bank assessing a client’s ability to pay the debt off in a reasonable time if in fact the client’s history shows that that is unlikely even though they may potentially have the financial capacity to go so.
If people have not been taught good financial management at an early age then managing debt is not always easy to do and unfortunately, here at Balanix we see the outcome of poor financial management far too often.
Contact me today on 07 3264 4783 if you want to talk about managing your money either in your business or personally.