Helping consumers make informed choices
These reforms may seem like overkill to some but the fact is that many people sign up for credit products without realising the full implications for their own situation. Many people are shocked when they realise that only paying the minimum due on their credit card each month will simply create a debt that never goes away.
According to CANSTAR calculations, as shown in the graph below, a $5000 debt on an average credit card interest rate will take a whopping 154 years to pay off at the minimum stated on the monthly statement. Paying an extra $10 a month dramatically shortens the debt to 28 years, while paying an extra $20 a month means the debt is cleared in over 14 years – still unacceptable but a lot better than 154 years!
Any reforms that provide a greater degree of transparency for the consumer have to be a good thing. The bottom line is that consumers should make sure they are getting the utmost benefits from the reforms or they may well get caught in the void between new and existing credit card accounts.
