The Australian government has introduced four reforms designed to protect consumers and promote responsible credit card lending.
The first reform was implemented on 1 July 2018 and the remaining three came into effect on 1 January 2019.
The four reforms are:
1. Ban on credit card limit increase invitations – This includes all forms of communication (including email, phone and in-branch).
2. Stricter credit limit assessments – An application for a credit card or a credit card limit increase must be assessed on the applicant’s ability to repay the entire credit limit within a three year period.
3. Online credit card cancellations – Issuers must now take reasonable steps to help meet the customer’s request. Contrary suggestions to customers may no longer be offered.
4. Ban on backdated interest charges – Interest cannot be retroactively charged.
These reforms to promote responsible lending will make it easier for some people to cancel credit cards, but make it harder for others to access higher credit limits.
February 2019