'New credit card laws don't go far enough'
Credit card debt is a huge problem for Australians, with the Australian Debt Clock showing we owe around $48 billion on plastic.
To help curtail Australia's credit card debt problem, federal treasurer Scott Morrison has released new measures to protect Australians from "predatory behaviour".
Before the end of the year, the government will require credit card affordability assessments to be based on the consumer's ability to repay the credit limit within a reasonable time period.
It will also ban unsolicited offers of credit limit increases, so you can say goodbye to those annoying letters and emails. It will also simplify how interest is calculated and require online options to cancel cards or to reduce credit limits.
Mozo director Kirsty Lamont says the government's crackdown doesn't go far enough to address Australia's spiralling credit card debt problem.
Lamont says the minimum repayment levels are the real issue with Australian credit cards. According to Mozo, the average cardholder making a 2% minimum repayment would take more than 35 years to pay off the average debt of $4355.
"Our calculations show that [the] measures announced by the federal government will achieve very little in curbing the staggering $52 billion in debt outstanding on credit cards," Lamont says.
"If the pollies were serious about slashing the size of our outstanding credit card bill, they would get tough on card issuers and force them to lift their minimum repayment criteria."