New Government credit card reforms explained
New Government reforms to credit cards come into effect on July 1. Our Forster Branch Manager Mick Herb has the details on what the reforms mean for you.
According to AFR Smart Investor Australian’s are addicted to plastic. At any given point in time we carry about $50 billion in combined credit card debt. Yes, $50 billion.
Credit cards are a great way for business and consumers to safely and securely buy things online or at the shops. But interest rates on many cards are very high (around 18%) so they can be a source of financial problems if you don’t manage them carefully.
The reforms to credit cards aim to give cardholders more control. Just like with home loans, all credit card providers are required to have a standard fact sheet with key information set out in the same way, to help you to compare cards. Your monthly statements will now include personalised information such as how long it will take you to pay off your entire balance if you only make minimum repayments. Any interest free periods have to be clearly explained so it is easier for you to understand exactly how they work.
When you apply for a new credit card you nominate a credit limit and your card provider can’t send you offers to increase your card limit unless you agree to receive them.
Your card provider has to notify you when you have exceeded your credit limit so you can decide whether to keep using your card or to make a payment. They can’t charge you a fee for being over your limit unless you specifically agree to that fee for such a service.
Credit card providers also have to direct repayments to the most expensive part of your credit card debt first – making it easier to reduce your debt faster.
At The Greater we welcome reforms that make it harder for consumers to get into credit card debt. Our business and personal credit cards are low rate Visa cards. Unlike many other financial institutions we have cut our card rates. For more information on those cuts and tips on avoiding card debt read my colleague Vicki Briggs’ blog.
For more information on a credit card talk to me or one of my colleagues at the Greater on 1300 651 400 or visit your nearest branch.