Looks like the new rules are going to affect those who churn and have lots of credit cards simultaneously. Some may want to apply to the cards they wanted before Feb 1 if the serviceability is close to the limit.
https://www.finder.com.au/how-the-new-credit-card-rules-will…
This is true, having said that many companies lend irresponsibly as well. It takes 2 too tango…
There are no irresponsible lenders only irresponsible borrowers.
Banks are there to lend, that's their function, that's role, thats their business.
It is incumbent on consumers to determine what levels of debt they can service comfortably.
The mortgage scandal in the USA 2007/2008 proved otherwise. Convincing people they can afford something using every trick in the book when they clearly can't.
If I told you the Sky is purple and you can see the sky is blue but then agreed the Sky is purple, isn't that an equal indictment on you?
Those Americans knew they could not afford the repayments once the teaser rates expired, and they opted to make that a problem for another day.
Yes, Banks aren't faultless in that extreme example, but the majority of the blame should be on the borrowing public.
But we cannot blame the people, Banks are the convenient punching bag.
@tsunamisurfer: "There are no irresponsible lenders only irresponsible borrowers."
"Yes, Banks aren't faultless in that extreme example, but the majority of the blame should be on the borrowing public."
These 2 statements contradict each other. Added to which irresponsible lending and borrowing is happening globally, nothing extreme about it, it's par for the course.
"But we cannot blame the people, Banks are the convenient punching bag."
Like I said before, it takes 2 too tango.
I mean, all that means is that neither can blame the other. But all I see are borrowers blaming lenders - I agree, it takes 2 to tango. Borrowers are just at fault.
This is an interesting policy to put a term cap on the calculation of 3 years.
Anyone know what it is currently?
And also factoring in repayments from all other liabilities is crucial but I would hope that is already happening now.
I don't really have an issue with this policy as I could double my liabilities now and still be able to service it.
I don't think this will be as effective as what the authorities think though, people who are bad with money will continue to be bad with money via 2 credit cards instead of four.
The underlying issue that these people constantly spend more than what they bring in, this policy does nothing to fix that problem, only slightly mask it with a lower credit limit. That undercurrent compulsion to spend is still there.
In one of the articles on the topic I think they mentioned that it's 5 years currently.
Depending on the bank - when testing servicing, repayments for cards are currently factored in as being between 2% - 4% of the credit limit ie the actual minimum repayment required. This new legislation will be a game-changer, along with the changes to credit reporting which will not only show where you have applied (as is the case at present) but whether you were successful, and what your limit is. So in theory the percentage of "liar loans" should drop, although the number of loans declined due to non-disclosure is likely to increase.
i believe banks is only 10% at fault when some people claim they are in forever debt because of bank had given them high credit limit. the 90% is down to the people. they are the one spending it.
long time ago i had combined limit from 6 credit cards of over $85,000 with salary only $60k a year after tax.
still, i rarely used more than $1000 on card each month, and pay off completely.
nothing hard about it.
thought?
thought?
I thought the combined limits was unnecessarily high.
yes but i just gave example that someone can still be responsible and not spend all because they gave it to me attitude and later cant pay and cry to centrelink.
and the easiest to increase limit was citibank. second, anz.
If you think this is a bad idea look at this post from earlier https://www.ozbargain.com.au/node/401316
the general populous are morons who can't be trusted with easy access to money.
The tighter the restrictions the better for us all. If they don't we'll end up paying for it in the form of higher interest charges.
I don't know about that particular case. Maybe I'm just biased in favour of people who don't try to shy away from responsibility, but I think OP - while obviously not taking the ideal path - was taking a good approach to his debt there. Acknowledging that his own mistakes and issues led him to that situation, understanding that there was a problem needing solving, and asking for help for ways that he could deal with the problem without putting it on others.
Again, obviously better to not be $53k in the hole to begin with, but OP seemed to have gotten in there from a combination of family tragedy, bad career luck, and some small contribution of depression. All understandable factors, and not having an emergency fund notwithstanding, all factors which justify using credit if it's available. He racked up the $53k over the period of I think 4-5 years? Which isn't a lot if he was basically depending on it for living expenses when he was out a job and too depressed to work full-time.
The tighter the restrictions the better for us all. If they don't we'll end up paying for it in the form of higher interest charges.
True, except companies would take this into consideration anyway and regulations only curtail their ability to segment the market to offer better benefits to savvy consumers while extracting more profits from those less intelligent. And at its base, regulations curtail all individuals' freedom to contract as they choose. I have an in-principle objection to that.
If you think this is a bad idea look at this post from earlier https://www.ozbargain.com.au/node/401316
That example is a classic example of the borrower at fault.
These measures would not have helped that OP in anyway, why?, the OP was on more than $180k. $180k puts you in the top decile of Australian income earners. $180k is more than twice the amount the average Australian wage.
So his borrowing power, even with these new measures would have still be huge.
Despite being a man of great means he was still a Fk Up, despite earning $3.5k a WEEK he couldn't save some aside for tough times or even be in a position to pay off the cards.
I don't want banks to be blamed for scenarios such as this.
With great credit comes great responsibility.
Agree its different from someone gave a cake of course I eat it.
This is credit. You borrow. Why spend if you cant afford….
This is gold
Less financial irresponsible people can get credit therefore bank will be throwing points/qantas invites/ free first year towards ozbargainers to meet their quota
Thanks OP for the heads up/reminder.
What a joke.
Watch as those financially irresponsible still fall into endless debt and continue blaming everyone and everything but themselves for it.