Invites to raise credit card limits to lead to fines
Credit card customers are unlikely to be invited to increase their credit card limits after the government ruled that banks will be fined $220,000 each time they make such an offer.
The move was criticised by the Australian Bankers Association, the chief executive of which Steven Munchenberg said the law goes "way over the top", reports the Australian.
Under the new legislation, banks are also prevented from allowing consumers to borrow more than ten per cent above their existing credit limit.
However, Mr Munchenberg warned that if banks are restricted in offering Aussies the chance to extend the limits on their credit cards, there could be a surge in the number of people considering illegitimate forms of borrowing, such as loan sharks.
"The banks are going to be a lot warier about lending to them and there is a danger people will be forced into an unregulated market," he stated.
Last month, Karen Cox, coordinator of the Consumer Credit Legal Centre told the Age that the new laws might tempt people to compare credit cards and get new plastic to ensure they are covered by the legislation.
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