We’re drowning in $50 billion in credit card debt and almost one in five Australians has trouble keeping up with their credit cards, a new report by the Australian Securities and Investments Commission reveals today.
In a major review of the the credit card market in Australia by the regulator, the report has found almost 2 million or 18.5 per cent of card holders are struggling to maintain their debt.
‘Our findings confirm the risk that credit cards can cause financial difficulty for many Australian consumers’, ASIC Deputy Chair Peter Kell said.
The really scary thing?
Deputy Chair Kell also revealed we’re being offered high-interest or high-fee credit cards from the banks when lower interest products would be better suited to our needs.
One important aspect of the ASIC report is that not many companies take action to address persistent debt, low repayments or poorly suited products.
Plus, a concerning number of consumers who accessed a balance transfer credit card increased their debt with over 30 per cent of consumers increasing their debt by 10 per cent.
At MoneyPlace we have clear hardship policies. That means if you ever have trouble paying your loans or are struggling financially, get in touch.
I was paying off $200 a month onto the cards, but it was being destroyed by fees and interest charges.
MoneyPlace customer Danielle found herself with two credit cards and spiralling debt before she took action (read her full story here).
“It was always going to be a bit confronting; it’s so much easier to swipe your card and wonder where everything is going later,” Lowe said.
“When I looked at the MoneyPlace loan to refinance my credit cards I wanted to make sure my repayments would be less overall.
“I was paying off $200 a month onto the cards, but it was being destroyed by fees and interest charges. It was feeling like for every step forward I was taking two steps back.”
She’s now on track to be debt free in just a few years.
Here’s tips if you are struggling to keep on top of your personal loan repayments:
If you are late: Make sure you catch up promptly, pay the repayment and any late fees due.
Unfortunately, if you are 14 days or more late for a particular month, credit providers are required to report your loan repayment for that month as late on your credit file.
If you have paid late in the past, it’s not the end of the world – once you get back on track, your on-time repayments will now be recorded on your credit file and balance it out over time.
If you can’t make a payment: We understand life has speed bumps, so contact your credit provider immediately to discuss your options.
If you are in financial difficulty from an unexpected life event, and you’re finding it hard to keep up with your bills be sure to let your credit provider know.
Rather than let your loan fall behind, you can probably apply for assistance under a hardship program. Applying for hardship will not affect your credit file or credit score.
If you are approved under a hardship program, you will likely be able to access temporary arrangements to help you get back on track. As long as you keep to your arrangements, your repayment history won’t be adversely reported.
If you need any outside assistance, you can contact the National Debt Helpline on 1800 007 007.