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ASIC warns of ‘debt trap’ as Australians cripple under $45 billion credit card debt

The financial watchdog wants tighter regulations on lenders to help lift the financial burden on millions of Australians in credit card debt.

The corporate regulator is calling for responsible lending assessments to be based on whether someone is able to pay off a credit card within three years.

It comes after a major review by ASIC has found 14 million Australians have a credit card debt, and one in five are struggling to pay it off.

The outstanding balance has hit $45 billion dollars.

Deputy Chair Peter Kell tells Ross Greenwood it’s “quite a concerning”.

“We’ve found quite a concerning level of people who are really struggling to pay back their credit card debt.

“One in five people being in that position clearly signals we have a problem.”

He says Australians are being crippled by a “debt trap” and new laws being introduced next year will see stricter rules for banks.

“Banks will have to undertake a tougher assessment of whether the customer can pay back the credit under a credit card within a reasonable time frame, we’re proposing three years.

“Unsolicited offers to increase the limit, those will now be banded coming forward.”

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