Credit card shoppers need to boost their awareness of fees and interest rate charges on their credit cards, according to a report and survey conducted by leading bank Citibank.
Almost half of all respondents (48 per cent) to a recent survey were ignorant of the interest rate on their credit card, according to the research by banking group Citibank.
And almost one-third (31 per cent) were unsure how many interest free days they were entitled to after making a purchase.
Citibank's card marketing chief, Madeline O'Connor, said it was important consumers took care.
"We want to encourage people to know the basics on their credit card, after all it's something that is used regularly by many of us," Ms O'Connor said.
The research also found almost one quarter of respondents (23 per cent) were unsure if the interest rate that applied to credit card purchases also applied to cash advances.
A majority also thought women were more likely than men to make impulse credit card purchases, but the items they bought were more practical.
Citibank surveyed 972 people for the study, nationwide.
Source: AAP
Wednesday, January 24, 2007
Credit cards and personal loans on low incomes the biggest cause of Australia's bankruptcies
Excessive debt run up on easy credit is causing concern.
The number of people declared bankrupt or entering into agreements with creditors jumped 16.4 per cent last year, with higher interest rates and excessive debt to blame.
The Inspector-General in Bankruptcy, Peter Lowe, yesterday said the number of people getting into trouble with their creditors had been rising since 2002-03. "There has been a resurgence of bankruptcy activity. It is not astronomical but it is happening," he said.
During 2006, 23,840 people went bankrupt while a further 5800 entered formal agreements with their creditors.
The number of bankruptcies peaked at 26,320 in 1998-09, but there were fewer debt agreements then. Creditors increasingly sought a formal arrangement, rather than accepting a default.
Mr Lowe said 18 per cent of bankruptcies were related to businesses, with most of the people involved blaming trading conditions.
The overwhelming bulk of bankruptcies were individuals who had either suffered a loss of income because of unemployment, or had taken on excessive debt.
"A lot of the activity relates to people with low incomes and relatively small unsecured debt," Mr Lowe said.
More than two-thirds had earned an income of less than $30,000 in the previous 12 months.
Credit cards were the biggest problem, accounting for 37 per cent of the outstanding debt, while personal loans accounted for 21 per cent.
Store cards and car finance each accounted for 13 per cent.
The number of bankruptcies associated with people running their own businesses had increased in line with the number of consumer debt defaults.
Although the numbers were rising, Mr Lowe stressed that it remained a tiny proportion, at just 0.14 per cent of the population.
The number of people declared bankrupt or entering into agreements with creditors jumped 16.4 per cent last year, with higher interest rates and excessive debt to blame.
The Inspector-General in Bankruptcy, Peter Lowe, yesterday said the number of people getting into trouble with their creditors had been rising since 2002-03. "There has been a resurgence of bankruptcy activity. It is not astronomical but it is happening," he said.
During 2006, 23,840 people went bankrupt while a further 5800 entered formal agreements with their creditors.
The number of bankruptcies peaked at 26,320 in 1998-09, but there were fewer debt agreements then. Creditors increasingly sought a formal arrangement, rather than accepting a default.
Mr Lowe said 18 per cent of bankruptcies were related to businesses, with most of the people involved blaming trading conditions.
The overwhelming bulk of bankruptcies were individuals who had either suffered a loss of income because of unemployment, or had taken on excessive debt.
"A lot of the activity relates to people with low incomes and relatively small unsecured debt," Mr Lowe said.
More than two-thirds had earned an income of less than $30,000 in the previous 12 months.
Credit cards were the biggest problem, accounting for 37 per cent of the outstanding debt, while personal loans accounted for 21 per cent.
Store cards and car finance each accounted for 13 per cent.
The number of bankruptcies associated with people running their own businesses had increased in line with the number of consumer debt defaults.
Although the numbers were rising, Mr Lowe stressed that it remained a tiny proportion, at just 0.14 per cent of the population.
Monday, December 18, 2006
Pre-paid credit cards to be the next big thing
Pre-paid credit cards could soon become more common than phone cards as providers scramble to meet demand for more flexible payment options.
In recent weeks, MasterCard and Visa have launched a raft of pre-paid cards, hoping to cash in on markets previously beyond their reach - such as children, students and adults who have a poor credit history. Pre-paid cards, which could eventually be available at local convenience stores, allow the user to shop online, over the telephone or in person using credit paid for with cash when the card is purchased.
Users load the card with their desired credit amount, typically less than $1000.
The cards don't require a bank account, and can be given away as a gift, or a kind of electronic pocket money to children, allowing purchases such as music downloads.
Already common in overseas markets - including the US, where they are popular among illegal immigrants unable to open bank accounts - pre-paid cards are relatively new to Australia.
But MasterCard and Visa believe there is growing, unmet demand as credit card-style transactions become increasingly necessary for purchases such as airline tickets, hotel bookings and online items.
Infochoice analyst Denis Orrock says pre-paid cards may also prove popular with shoppers concerned about online security.
"In Australia, they will fill a void for people who want to shop on the Net but aren't comfortable using their credit card," Orrock says.
"With a pre-paid card, you know what you're in for."
MasterCard has launched two pre-paid cards, the Westpac Gift Card, available with pre-paid amounts of between $15 and $800, and the Commonwealth Bank travellers cash card, an ATM card
that allows travellers to withdraw pre-paid cash in foreign currency.
Last month, Visa launched the ANZ Gift Card, following up on its Heritage Building Society card, released in May, and the Visa BoPo, its first general-purpose pre-paid card.
Last month also saw the release of Visa's CashXpress, allowing users to send money overseas, and the Universal Visa Gift Card.
Although they miss out on the interest charges that accrue on a credit balance, card providers make money from the sale of individual cards, which cost around $5 each.
They can also re-invest the prepayments until the money is spent, earning returns on the short-term money market.
Based on US experience, most card users take about three months to spend a balance.
As well, Denis Orrock says card providers can usually bank on small sums of a few dollars each remaining unspent at the card's expiry date, generally around six months after purchase.
Source: Sunday Telegrah
In recent weeks, MasterCard and Visa have launched a raft of pre-paid cards, hoping to cash in on markets previously beyond their reach - such as children, students and adults who have a poor credit history. Pre-paid cards, which could eventually be available at local convenience stores, allow the user to shop online, over the telephone or in person using credit paid for with cash when the card is purchased.
Users load the card with their desired credit amount, typically less than $1000.
The cards don't require a bank account, and can be given away as a gift, or a kind of electronic pocket money to children, allowing purchases such as music downloads.
Already common in overseas markets - including the US, where they are popular among illegal immigrants unable to open bank accounts - pre-paid cards are relatively new to Australia.
But MasterCard and Visa believe there is growing, unmet demand as credit card-style transactions become increasingly necessary for purchases such as airline tickets, hotel bookings and online items.
Infochoice analyst Denis Orrock says pre-paid cards may also prove popular with shoppers concerned about online security.
"In Australia, they will fill a void for people who want to shop on the Net but aren't comfortable using their credit card," Orrock says.
"With a pre-paid card, you know what you're in for."
MasterCard has launched two pre-paid cards, the Westpac Gift Card, available with pre-paid amounts of between $15 and $800, and the Commonwealth Bank travellers cash card, an ATM card
that allows travellers to withdraw pre-paid cash in foreign currency.
Last month, Visa launched the ANZ Gift Card, following up on its Heritage Building Society card, released in May, and the Visa BoPo, its first general-purpose pre-paid card.
Last month also saw the release of Visa's CashXpress, allowing users to send money overseas, and the Universal Visa Gift Card.
Although they miss out on the interest charges that accrue on a credit balance, card providers make money from the sale of individual cards, which cost around $5 each.
They can also re-invest the prepayments until the money is spent, earning returns on the short-term money market.
Based on US experience, most card users take about three months to spend a balance.
As well, Denis Orrock says card providers can usually bank on small sums of a few dollars each remaining unspent at the card's expiry date, generally around six months after purchase.
Source: Sunday Telegrah
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