The total of credit card balances for households that actually carry debt from month to month is 2 billion.
As of the third quarter of 2017, households with credit card debt owed an average of ,683And as household incomes have risen in recent years, this has helped to lower the ratio of credit card debt to income.
Credit cards are rapidly becoming one of the most common causes of personal bankruptcy, and there are indications that the major banks have been granting inappropriate credit limits, possibly breaching responsible lending laws.
Consumer protection groups want the responsible lending laws strengthened so that credit card limits are not assessed on whether someone can just meet the minimum repayments — which could leave them in almost perpetual debt."So that lenders, before advancing a credit card or increasing a limit, must make an assessment about whether the borrower can repay that credit within a reasonable period," said Mr Brody."And we think that period should be three years at the very most."Debt consolidation loan approvals have averaged 6 million per month so far this year, up 68 per cent from 7 million per month last year.
The rise in such personal loans is so rapid that they now dwarf lending for household goods and are rapidly catching up to car lending."I would think that the banks have been pushing this as a product or similar, or that there is an increasing amount of distress amongst some households pushing them towards these products," he theorised.
Even as household income and employment rates are ticking up in the U.
S., credit card balances are approaching all-time highs.
The ABC has seen loan documents that put her income at 0,000 per annum.
While she had earned ,000 in a single month, Mary was on commissions and did not earn anything many other months.
Most of these loans are taken out to consolidate credit card debts, because they generally have a lower interest rate and offer fixed monthly repayments that reduce both principal and interest.
However, Gregory Mowle warned that they can leave people in more financial stress if the bank issuing the loan does not ensure that all the credit cards being paid off are cancelled."If someone is consolidating credit cards belonging to another lender, there has to be an agreement that those cards are closed down, not just paid off but cancelled," he said.
carry credit card debt from month to month, and another quarter (26 percent) carried credit card debt at least once last year.
If you look at the total credit card balances among U. households, the figure appears astronomical — 8 billion.
Like Mary, many of them ended up using the card to try and keep up their mortgage repayments once they started falling behind. The ABC has spoken to a police officer with credit card limits totalling around 0,000 — more than one-and-a-half times his annual pay.