Credit cards clean-up

Lenders trying to help customers wrangle big debts

CREDIT card providers have started cleaning up the way they treat customers burdened with plastic debt.

Many Australians are wrangling huge card debts that often get worse at Christmas – latest Reserve Bank of Australia statistics revealed the nation owes a massive $51.6 billion, with $31.7 billion of that accruing interest.

The corporate regulator, the Australian Securities and Investments Commission (ASIC) yesterday released the report, Credit Card Lending in Australia. The update shows many of the 10 lenders who are part of the review are beginning to improve how they handle card debts.

A series of major changes will be rolled out from January 1. The latest report found many credit providers were taking the following steps:

■ Trialling measures including structured payment arrangements to help customers with problematic card debt.

■ Restricting the amount that customers can exceed their card limit to 10 per cent.

■ Adopting a fairer approach to balance transfers, including allowing those who have made transfers interestfree periods on any new purchases.

■ Improving disclosure on how to cancel old credit cards.

ASIC engaged 10 of the largest credit card providers in the review, including American Express, ANZ, Bendigo and Adelaide Bank, Citigroup, CBA, HSBC, Latitude, Macquarie, NAB and Westpac.

The report found Macquarie, CBA and HSBC have been the most progressive in adopting credit card changes.

ASIC commissioner Sean Hughes said he expected all lenders to address issues raised in the review. “We will be monitoring lenders to make sure they have taken action to address our concerns and to ensure that consumer outcomes are improving in the credit card market,” he said.

Financial comparison website RateCity said it was great to see card providers taking responsible lending seriously.

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