On Saturday 17 June 2017, Principal Solicitor Gemma Mitchell spoke on Heritage FM about issues relating to credit and debt, in particular credit cards. Below is a summary of the important points discussed during her show.
Credit Cards and Interest Rates
A credit card is a type of loan. When you make a payment using a credit card, you usually have to pay back the amount with interest, fees, and charges.
It is very important to check your statements regularly and pay your credit card on time. If you miss any payments, you will be in default and you may also incur late fees, as well as a higher interest rate on your late payments. If you do not take any action, your credit card debt will continue to increase and accrue interest.
You should also be on the lookout for any usual transactions on your statement which you do not recognise or you think are incorrect. There are strict time limits within which you can dispute these unusual or unauthorised transactions.
If you are having difficulties paying off your credit card debts, some options available to you may include:
- applying for a hardship variation;
- negotiating an arrangement to pay by instalments or to settle the debt; or
- re-financing the credit card.
Minimum monthly repayments
If you can afford it, you should try to pay more than the minimum monthly repayment on your card. This way, you can pay the credit card off earlier and pay less interest overall.
If you want to calculate the total interest payable on your credit card and how long it will take to pay off your balance based on different monthly repayment amounts, you can use the ASIC Money Smart Credit Card Calculator. This can be found on ASIC Money Smart’s website: https://www.moneysmart.gov.au/
Fees and Charges
Before taking out a credit card, be sure to check the terms and conditions for any fees or additional charges. In particular look out for: annual fees, late payment fees and international transaction fees. Fees may be changed at any time if your credit card contract allows for this.
Firstly, the bank must notify you if they become aware that you are have used your credit card in excess of the credit limit.
Secondly, for credit cards issued after 1 July 2012, banks cannot charge you a fee or higher interest for going over the credit limit unless you separately agree to being charged this. You are able to withdraw this consent at any time.
Credit card surcharges
Some businesses may add a surcharge to the purchase price where you use your credit card to pay for things.
Businesses typically charge surcharges to cover their costs in processing credit card payments. Recently new laws banning excessive surcharge fees for debit, credit and prepaid card transactions have been introduced. This means a business cannot charge you more than what it actually costs them to process the payment. This ban will apply to all businesses from 1 September 2017.
Where can you go for help?
If you believe you have incorrectly incurred interest, fees or charges, you can complain to the card provider’s Internal Dispute Resolution department; and failing a satisfactory resolution, you may refer the matter to the card providers External Dispute Resolution scheme.
Alternatively, you may wish to contact a financial counsellor. Financial counsellors offer free information and advice to those experiencing financial difficulties. To find a financial counsellor that is nearest to you, you can go onto their website: http://www.financialcounsellors.org/
For more information about credit cards, you may wish to take a look at the video on our website at www.cclswa.org.au under the ‘advice’ tab. This will also provide you with links to other useful factsheets and sample letters which may assist you in your dispute with your credit card provider.
If you can’t find what you are looking for on our website or would prefer to talk to someone, you can call our telephone advice line on (08) 9221 7066.