Trending Financial News 15 November
Credit cards offering amazing deals to entice customers back
Many Australians are cutting up their credit card and using debit cards or other ways to pay. Almost one million credit card accounts have been closed in the last 12 months.
Now the banks and other card issuers are fighting back with amazing deals to entice customers to try credit cards again.
Deals including interest free on purchases and balances transferred, 100,000 bonus points, cash back offers and price drop guarantees.
Google bank account is coming soon
Google is developing an everyday transaction banking account product with Citi and small credit union. The project is code-named Cache, reported the Wall Street Journal.
Consulting firm McKinsey & Company reported that 58 per cent of survey respondents said they would trust Google with financial products.
Other tech giants are also moving into finance. Facebook is working on a digital currency and Apple has launched a credit card.
Facebook Pay launched in the USA
Facebook have launched Facebook Pay in the USA and promise to roll out the new payment method to other countries soon and across Facebook, Messenger, Instagram and WhatsApp.
With Facebook Pay, users add their preferred payment method once then use Facebook Pay to make payments and purchases.
Facebook Pay is being rolled out on Facebook and Messenger this week in the USA for transactions relating to fundraisers, in-game purchases, event tickets, person-to-person payments on Messenger and some Facebook Marketplace purchases.
Debt spiral traps payday borrowers
Payday lending is booming, with the total market growing at 10 to 15 per cent a year over the past few years, according to a new report from consumer groups and financial counselling services.
The number of loans written each month has increased from 100,214 in 2016 to 135,402 in early 2019 with 15 per cent of payday loan borrowers reportedly falling into a debt spiral. The consumer groups are concerned that payday lenders target vulnerable consumers.
Ten years ago, 5.6 per cent of payday loans were online, now the proportion is around 85 per cent.
What happened to the debt spiral reforms?
A small amount credit contract is a personal loan up to $2000 that is paid back over a period of 16 days to 12 months. Consumer groups say 15 per cent of borrowers fall into a debt spiral.
The government prepared a draft law in 2016 introducing a cap on total payments, changes to fees, strengthened penalties and banned door-door selling. The draft law required small amount credit contracts to have equal repayments and equal payment intervals.
Since then the draft law has not been introduced to parliament and no changes have been made to payday lending or small amount credit contract rules.
Owner occupiers driving the home loan market
Mortgage sales have been growing strongly since May, driven by owner-occupiers looking for great loan deals, according to CoreLogic and ABS data.
The value of new owner-occupied home loans is up 17.3 per cent and the value of investor loan commitments is up 8.4 per cent. The value of investment loan commitments was up 6 per cent in the September quarter.
Investors now make up about 24.8 per cent of the new loan market, down from 43 per cent in December 2014.