Credit Card Help
Banks are under increasing pressure to provide assistance to customers struggling with credit cards, given the current financial climate. In Australia, all consumer finance providers (not for business purposes) are signatories to the Uniform Consumer Credit Code (CCC). This is state legislation based on common principles. The Government help with credit card debt all the time, which can reassure a lot of people eager to solve their debts.
Under the CCC, lenders need to provide “hardship provisions” or credit card help. This can consist of a variety of factors, is not defined in the legislation and is up to the credit provider to determine what is “reasonable”. These factors include: freezing interest, freezing payments, or a combination of both.
However, credit card help is a short term solution, lasting generally for three months and at the longest, six months. If your situation relates to a short term problem, then this may be a great solution, but if your problem is more long term in nature you should look at other options.
Why is Credit Card Help so Important?
With aggressive marketing and the availability of credit cards, Australia’s credit card debt in 2016 stood at over $52 billion.
Currently, Australia has an average of over $3000 in credit card debt per person. This scale of credit card debt means that Australians are particularly susceptible to credit card stress should their income reduce.
Credit card debt tends to not be evenly distributed through the community, with those who are least able to afford debt being forced to use it for unexpected expenses. This is one of the biggest problems found within credit card applications, that can thus prove to be detrimental to the recovery of those that struggle with repaying debts on time every time.
There is a large amount of political pressure currently on credit card companies to assist their clients when they fall into financial difficulties. Unified national consumer legislation is about to be introduced, ensuring that voluntary hardship consideration is mandatory.
It’s important therefore to ensure that your credit card debts are controlled in a safe manner. If you’re unable to set a target each month to pay down some of your potentially mounting debts, you could be in danger from debt collectors. You can learn about how to deal with debt collectors with our go-to guide.
Specific Government Help With Credit Card Debt
In 1996, the Commonwealth Government introduced legislation specifically addressing unsecured debts (mainly credit card debts). This option has become increasingly important due to rising rates of insolvency.
Insolvency refers to not being able to afford current financial commitments, which has increased due to a variety of factors: banks increasing credit limits without exploring affordability, dramatic increases in the cost of living, and reductions in employment or overtime. Many people who were previously able to afford their debts are finding themselves insolvent.
Going through debt agreements works in the the best interest of both the creditor and the client. These agreements allow clients to repay what they can afford and allow creditors to minimise their losses.
There are much less restrictions found within a debt agreement in comparison to bankruptcy which often works out better in terms of access to certain privileges, such as being able to go abroad. Making an agreement with your creditor can ease the pressure every month, should you be struggling with credit card debt help.
If you’re interested in finding out more, check out our personal debt solutions page to find out how we can help you with your credit card debt.