The new credit card reform finally takes effect this January, with Australian banks and lending institutions becoming stricter in increasing credit limit and zero-interest balance transfers.
The Australian Securities and Investments Commissions (ASIC) will only give a credit limit that applicants can repay in a span of three years. This period is crucial to both existing cardholders and those who are planning to apply.
In a report published by SBS News, ASIC said that “We expect that there will be only a small portion of consumers who either cannot access credit at all due to the prescribed period or who cannot reduce their existing credit card debt.”
The reform also bans card issuers of credit limit increase invitations to its customers. All forms of communications including email, in-branch and calls are not allowed. In addition, online card cancellations must also be available for cardholders to meet their requests and demands to either close an account or reduce credit limit.
“2 million Australians suffering from credit card debt”
Last July 2018, an ASIC report shows a total of two million people are having a hard time to pay off debts on credit cards. The commission also reminded lenders to help their customers get back up and provide suited products based on the financial status of customers.
ASIC eyes a total of nine major credit card providers including American Express, Citigroup, Bendigo and Adelaide Bank, ANZ, HSBC, Macquarie, Latitude, Westpac and NAB to enforce the credit card reforms and stay committed to helping their customers improve their credits. For two years, these lenders will be monitored by the commission “to ensure they’ve taken action to address our concerns.”
These credit card reforms rolled out last July 2018 and are finally effective starting January 1, 2019.
