A corporate regulator is proposing a three-year repayment period.
Reuters reports that corporate regulator Australian Securities and Investments Commission (ASIC) is planning to make banks set credit card lending limits following a recent surge in credit card debt.
ASIC proposes a three-year repayment period following the results of a report which revealed that nearly fifth (18.5%) of consumers were struggling with credit card debt and that this presents a debt trap for more than one in six Australian consumers.
“Our findings confirm the risk that credit cards can cause financial difficulty for many Australian consumers”, ASIC deputy chair Peter Kell said in a statement.
Card usage in Australia ballooned to almost 23 million transactions per day in 2017 as residents shun cash and cheques in favor of the plastic, according to a report from RetailAsia.
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This translates to over 8.3 billion card payments last year whilst the number of used cheques crashed by almost 20% to 89.7 million in 2017 and the number of cash withdrawals at ATMs dropped 5.9% to $610.1m.
The new reform will apply to credit licensees providing credit or credit assistance in relation to both new and existing credit card contracts from January 1, 2019.
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