“Dodgy, dodgy bastards.
Crooked people doing this type of thing should be run out of the country, let alone run out of the industry.
It should make your blood boil when you hear that type of thing. And understand its targeting people, targeting communities.
It is just deadest rotten.” (Listen here)
Newsletter – July 6 2018
The Reserve Bank has left the official cash rate on hold at 1.5 per cent yet again. This is the 23 months straight it’s been at the emergency low – 21 meetings in fact, since August 2016.
And despite all the talk of when it will change – it’s unlikely any time in the next 12 months.
Because the RBA is stuck.
Between a strengthen economy, cooling house prices and high consumer debt – Australian households cannot afford an increase in interest rates.
This isn’t even mentioning sluggish inflation, and near record low wages growth.
Considering, this is the longest period of time the Reserve Bank has kept interest rates on hold… it says a lot about Australian households.
Because you see, the real issue here is the US Federal Reserve has raised interest rates six times, its building something of a buffer for itself. If America has a downturn, the Fed Reserve has the opportunity to lower rates and give American households the extra cash it needs. Australia can’t do that. We are at emergency lows. If a downturn in our economy comes, we can’t lower interest rates to give households extra cash it desperately needs.
Now, the Reserve Bank has come out with its reason why its kept it on hold – strengthen economy, cooling house prices, consumer debt – but the main reason is, households are feeling the pinch.
Sure the Government has a lot of money coming through the door right now, but households don’t.
Energy bills, health insurance, childcare, fuel, and the list goes on.
And if the Reserve Banks does put up the interest rates, it will put enormous pressure on those households – something that neither the households nor the government wish for at this time.
And just to prove just how much Australia households are struggling right now – a report this week by the financial watchdog ASIC found one in six credit card holders, 14 million people, have a credit card debt they are struggling to pay off.
This is a huge wake-up call. Laws will change.
I spoke to Peter Kell, the deputy chair of ASIC who says “We’ve found quite a concerning level of people who are really struggling to pay back their credit card debt.
“One in five people being in that position clearly signals we have a problem.” (Listen here)
This is a major problem. As I said, laws will change.
And this is just one example, from January 1 next year, a bank must be certain a person can repay a debt within three years before issuing any new card.
“Banks will have to undertake a tougher assessment of whether the customer can pay back the credit under a credit card within a reasonable time frame, we’re proposing three years.”
But how do so many people get caught in this debt? You would think the majority of people are responsibility – but it’s actually very easy and many of us are guilty of doing it.
Say you have $5000 outstanding on your card. The interest rate is 18 per cent.
To pay it back in three years costs $181 a month but the banks minimum repayment is $20 a month. So of course you opt to pay that, why fork out the extra money when you don’t really have to.
At that rate, you’re trapped – paying 18 per cent for 33 years.
Now, ASIC says if people or their banks actively change to the low rate card, the savings would be $620 million a year.
But, if you’re a bank – lending money at 18 to 20 per cent a year, why would you encourage people to change?
Its hugely profitable. And in the words of Fiona Guthrie, the CEO of Financial Counselling Australia: “they have been sitting back and milking Australians for all there worth” (Watch here)
And that’s what ASIC wants fixed.
Considering all that’s being revealed at the Royal Commission…this will be a big win for ASIC if they can crack down on credit card debt.
Property prices might be slumping, but not for everywhere – Watch Here
Money News –
The Royal Commission reveals dodgy, dodgy, bastard – Listen Here
What can you buy with $120,000? – Watch here
Interviews during the week
Interviewed Scott Morrison, Treasurer titled ” What is this GST ‘pie’ and is it fair for all states?