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Record credit card debt eats into Australian savings.



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Media Release by…

ALAN GRIFFIN MP Shadow Parliamentary Secretary for Consumer Affairs & Banking Services

14th November 2002

RECORD CREDIT CARD DEBT EATS INTO AUSTRALIAN SAVINGS

The Reserve Bank of Australia transaction card statistics show Australian credit card debt again hit record levels, with total debt soaring to almost $21.7 billion in September.

That’s an increase of almost $200 million in one month.

Average credit card debt was a record $2256, while the average credit limit for consumers hit $6531.

Earlier this week the National Centre for Social and Economic Modelling (NATSEM) released the ‘Who are Australia’s best savers?’ report prepared for the Financial Planning Association. According to the report, credit card debt was the most prevalent form of debt confronting Australian households in 2001 - cutting across all age groups.

Of particular concern was the finding that 15 to 20 percent of households were spending between 26 and 50 per cent of their take-home income on debt servicing in 2001. Given the Reserve Bank’s November Statement on Monetary Policy showed credit card interest rates averaging 16% (compared to the cash rate of 4.75%), consumers are particularly vulnerable when it comes to servicing credit card debt.

Labor calls on the Government, in cooperation with the states, to reform the Uniform Consumer Credit Code. This would ensure institutions are informing consumers of the impact interest rates have on monthly repayments, and preventing the increase of credit limits without request.

Continuing record credit card debt levels are evidence that this problem is not going to just go away - the Government must take action on behalf of Australian consumers.

For further information please contact: Alan Griffin: 0419 353 476 (02) 6277 4374