Swan unveils proposed credit card laws

08/04/2011

Consumer groups have welcomed new laws that Treasurer Wayne Swan has brought to parliament to give credit card holders a “fairer go” but are disappointed key changes won't apply to existing card holders.

The legislation will require lenders to allocate repayments to higher-interest card debt first, prevent lenders from charging over-limit fees unless consumers specifically agree their account can go over the limit and ban unsolicited credit offers unless the consumer opts to receive them.

In addition, the government wants lenders to inform consumers about the financial implications if they are only making the “required minimum” monthly repayment.

The co-ordinator of the Consumer Credit Legal Centre, Karen Cox, says the rules around allocation of payments and over-limit fees won't be retrospective. “They're only for newcomers,” she says. “People may want to get new cards just so they're covered.”

Card holders will have to choose from one of three options for their credit limit: A “hard” limit, where transactions would be rejected once they went over that amount, a default buffer of 10 per cent above the limit before transactions are rejected, or a higher “supplementary” buffer with a fee.

Source: The Age