Lenders’ ‘tempting offers’ lead Aussies to overspend on cards

More than a third of Australians say they’ve overspent on credit cards and blown the budget, having been tempted by lenders offering “easy credit enticements”.

According to a recent survey by Galaxy Research, conducted on behalf of Fox Symes Debt Solutions, more than a third of respondents (37 per cent) have exceeded their budgets, or have wanted to, due to their credit card provider offering to increase their card limit (16 per cent).

A further 10 per cent say they’ve overspent on credit cards in order to increase bonus points on their cards for flights and gifts, and 11 per cent said that they feel the ease of obtaining a credit card places them in a “precarious position”.

Others feel the relatively simple process of obtaining additional credit cards (9 per cent), along with the convenience of maintaining a minimum monthly balance to keep a card going (10 per cent), plus ongoing offers in the mail for new cards (6 per cent), are all strong incentives to keep spending more.

Fox Symes director Deborah Southon highlighted that consumers often ignore the fact that when they purchase something on credit, they may be spending money they don’t have. “This could lead to a situation where the debt becomes unmanageable,” she said.

Ms Southon believes that some of the onus for people’s reckless spending is also on the lenders. “If someone is already in debt, and I mean consumer debt, then clearly they are spending more than they earn. To offer people access to more credit when they can’t manage their existing debt is careless and reckless and only worsens an already bad situation.

“Regrettably we are contacted by thousands of people each year who have unmanageable debt and usually it’s credit card debt combined with unsecured loans including pay day loans.”

[Related: Challenger bank calls for credit card reforms]

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Francesca Krakue

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