Credit Card Debt

from: smh.com.au

Household savings improved in the June quarter, but credit cards overtook mortgages as the main form of debt in a survey of Australian households for the first time in almost four years.

The Melbourne Institute household financial conditions index rose 17.2 per cent to 33.7 in June, up from 28.8 in March.

“Credit card debt overtook mortgage debt as the main form of household debt in June, 36.6 per cent compared to 33.9 per cent,” Melbourne Institute research fellow Dr Edda Claus said in a statement.

“This is the first time since November 2006 that households nominate credit card, and not mortgage debt, as their main form of debt.”

The proportion of respondents nominating saving for a “rainy day” as their prime motivation for saving was 51.5 per cent, roughly unchanged from March, the survey found.

It also showed the proportion of respondents nominating holiday or travel as their motivation for saving was 55.8 per cent, up from 55.0 per cent in March.

The proportion of Australians saving grew marginally.

“About 48.8 per cent of Australian households saved part of their income in June 2010, up from 46.2 per cent in March,” the report said.

The June survey revealed three quarters of Australian households fully own their own home or have a mortgage, falling from 79.8 per cent in March and 78.8 per cent a year ago.

Just over 30.5 per cent of households said they would put new savings into deposit-taking institutions, while bank deposits remained the most popular form of savings.

More than 40 per cent of households said they were debt free, while a third said they held mortgage debt, down almost four per cent since last quarter.

There was virtually no quarterly improvement in the proportion of after-tax income used to repay debt, with almost 60 per cent of households indicating they use less than 10 cents in every dollar.

Meanwhile, people in Queensland were more likely to run into debt than those in other states, while NSW and Victorian residents were more likely to save than their counterparts in other states.

The average standard variable rate for mortgages offered by the big four banks is 7.38 per cent, according to RateCity.com.au, while the average low-rate credit card is 13.24 per cent. The average rate on a standard credit card is 19.6 per cent, the rate group said.

While the survey found credit card debt is the main form of debt for many Australians, the total outstanding mortgage debt remains larger by far. According to Reserve Bank data, mortgage debt totalled about $1.1 trillion in April, while other personal debt, which includes credit cards, tallied only about $141 billion.

A credit report is a document that contains information on your financial affairs, past and present. The standard details that will contained on your credit report will be:

• Your full name
• Your date of birth
• Your current address
• Your previous address
• Employer details past and present
• Details of any past or existing credit

When you apply for any kind of credit, regardless of whether it is a credit card application or a home loan application, your prospective lender will access your credit report. They do this to look at your credit history, background adn stability and use the information to make an assessment as to how a high of a risk you are.

The majority of credit report in Australia are held and organised by a company called Veda Advantage formally Baycorp.

Now what changes to credit reporting will mean for Australians is that their credit history (reports or files) will be more thoroughly examined than ever before. Creditors will take a closer look at your payment history any missed payments will be given more strength and may affect you being approved for credit.

Here are some of the changes to credit reporting you can expect:

1. When an account was opened.

2. When an account was closed.

3. What type of credit account was opened.

4. What the credit limit is on each credit account that is currently open.

All of this information will be deleted once an account has been closed for two years.

Other changes

• Anyone that has experienced identity or fraud can report it on their credit statement.
• Any overdue payment cannot be listed by the credit agencies if it is less than $100.
• Bankruptcies can be listed and the report can say whether it was forced on a voluntary.
• Any residential properties that have been purchased for investments can be included.
• Any reporting agencies or credit providers will have to agree to comply with the Privacy Act.
• Sensitive information cannot be collected.
• Anyone with an outstanding debt has to be given proper notification before the debt can be added to the report.
• Under the AML/CTF Act an identity can be verified with credit reporting.
• Direct marketing campaigns are not allowed to use any information from credit reports.
• Foreign credit and foreign credit providers cannot have their information disclosed by a credit reporting agency.

These changes to credit reporting mean that Australians need to pay more attention than ever to ensuring paymentss are not missed and that bills are paid on time.

With less time available to us to spend in bank queues, financial institutions have come up with another way for us to pay bills, make transfers, and check our balances while out and about. Mobile phone banking is here at last

The way the mobile banking system works will often depend on the individual bank you are with. Normally when you register with the service you will be sent an identity number, or some sort of pin, and this will be what you use to log in to the system.You will then be able to log into your accounts using your mobile phone web browser, and carry out all the normal transactions.

Not all banks offer mobile phone banking in Australia. The system is still in it’s infancy, but you can be sure it won’t be long before the banks not currently offering the service will jump on the bandwagon.

Customers are always looking for easier and more convenient ways to carry out their banking, and if their current lender does not offer the service, they will just head off to a competitor that will.

The banks that are currently offering mobile phone banking facilities include but are not limited to: ANZ, NAB, HSBC, CBA, Citibank, Suncorp and BoQ ( man that’s a lot of acronyms)

As technology is improving at an extremely fast rate, many people now own an iPhone. These phones are even more high tech, and provide an even more advanced platform to carry out your mobile phone banking.

There are some banks who already offer iPhone banking services- NAB, ANZ, Westpac, St George, Bank SA, CBA and Suncorp

Most banks, building societies and credit unions still provide old fashioned  call centres that will be able to help you with most transactions while you are on the phone. One things is certain the days of having to stand in a queue at your local branch are gone for good.