Plastic is not so fantastic for many

AUSTRALIA’S plastic problem was laid bare by the Australian Securities and Investments Commission (ASIC), when it announced recently our national credit card debt has reached $45 billion. Experts say that people in debt need to know they are not alone.

Financial Counselling Australia CEO Fiona Guthrie said people experiencing debt often feel trapped, but they do have options.

“Debt isn’t easy to address because it’s so stressful,” Ms Guthrie said. “Most of us, when faced with these situations, are overwhelmed.”

Ms Guthrie said those struggling should avoid balance transfer credit card deals, as they often end up in more debt and steer clear of payday loan products at all costs.

“An option like (payday loans) looks like a fix, but really they’re debt traps,” she said. “They’re anonymous if you apply online, which suits people who fear being judged, but onein-six Australians are in credit card debt, so there’s nothing unusual about it.

“They have high costs and interest rates range from 100 per cent to 400 per cent, over a short term.”

She said the first thing to do if struggling is contact your lender, who may offer you a break from loan repayments.

“Banks are pretty good to deal with,” she said.

Comparison firm Credit Card Compare receives visits from card users looking for better options, and CEO David Boyd said knowledge is power.