Unsolicited credit card limit increases to be banned from early 2019
In a move aimed at improving consumer protection and addressing the nations mounting credit card debt, the federal parliament passed a suite of changes last week, including a ban which will stop banks and other providers from sending unsolicited card limit increase offers to their customers.
From January 2019, banks will also be required to offer customers an online option by which they can cancel their credit cards or make changes to their credit card limits.
"These reforms will provide vital protection to vulnerable Australians and improve competition in the credit card market," Michaelia Cash, Minister for Jobs and Innovation, told parliament.
The changes to credit limits by the parliament came little more than a week after both Westpac and ANZ were forced to refund around $21 million to customers after an ASIC investigation found that the banks had been incorrectly increasing credit limits.
The reforms also coincided with the start of the year-long Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. While the commission is likely to focus on the behaviour and culture of the banks themselves, it could well provide some benefits to consumers - though more indirectly.
According to ASIC (the Australian Securities and Investments Commission), Australia’s cumulative credit card debt currently sits at over $33 billion, with the average credit card holder sitting on $4,278.19 worth of debt and accruing $705.05 in interest each year as a result.
Mozo Director Kirsty Lamont stated that while a credit card can be a handy payment companion, the lure of a higher card limit could ending up costing Australians in the long run - especially if they carry a balance on a card with a high interest rate.
“Sometimes owning a credit card can make it too easy to spend beyond your means. That’s why it’s important to sit down and really work out an appropriate budget for your spending, or if you do find yourself in debt, to find the best ways to start tackling it,” she said.
One option to consider if you are in credit card debt is a balance transfer card which could help you pay your balance off slowly without being hit with high interest payments.
Think a balance transfer card could help you ditch your own credit card debt? Start your search by heading over to the Mozo credit card comparison hub to compare a number of balance transfer offers.