Debt fears 'may be exaggerated'

Wednesday 21 April 2010

Article by Mozo

Concerns about the mounting personal debt problems of ordinary Australians may have been exaggerated, it has been suggested.

Shaun Cornelius, chief executive of Infochoice, told the Australian that the percentage lenders apply to a borrower’s net disposable income to work out how much they will allow in loans can range from 30 per cent for those on lower incomes to 50 per cent for those on higher incomes.

The newspaper argued that if that is the rule of thumb, then "the shock horror element" in reports on the current lending climate could have been overdone.

In addition, Mr Cornelius said that he expected financial institutions to become increasingly prudent and respect the practice of responsible lending.

The news may interest Aussies who wish to compare credit cards and other borrowing facilities.

Meanwhile, Elise Davidson, spokeswoman for the consumer advocate group Choice, recently told News Limited that Australian credit card holders should protect themselves from fraud by using separate products with lower balances when shopping online.

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