AVOID A NEW YEAR'S DEBT HANGOVER

Fair Trading Minister Margaret Keech today urged consumers to be careful how they use credit this Christmas.

Mrs Keech said with time fast running out for buying, wrapping and putting gifts under the Christmas tree, it is easy to be caught up in the frenzy of spending.

“The pressure of the festive season may force consumers into making rushed, unwise purchases,” she said.

“You don’t want to be tangled up in debt at Christmas and then find yourself in deep trouble come the New Year.

“Credit card offers can be very tempting, especially at this time of the year. Cards provide a quick and easy way to buy presents now when you are strapped for cash, and pay later, but they can also be a dangerous trap.”

Mrs Keech said the Office of Fair Trading received numerous complaints each month about credit cards and debt.

Common complaints include:

• credit card account terms - being charged fees on supposedly fee-free cards and disputes over agreed interest rates;
• difficulties closing accounts; and
• award programs - caps on award programs, misleading advice regarding changing cards to improve award rates.

“According to the Reserve Bank, Australians owe an average $2800 on their credit cards,” Mrs Keech said.

“These are alarming figures and for many consumers, credit card debt is a problem they struggle with on a daily basis.

“Credit is extremely accessible so people can spend well beyond their means rather than saving for their purchases.

“At this time of year when funds are commonly stretched, financial institutions can entice consumers into extending their credit limit.

”Extending your credit limit when you are already drowning in debt would be a huge mistake.”

Mrs Keech said people need to be aware that credit cards are an expensive type of loan with interest rates generally higher than personal, housing and motor vehicle loans.

“Often forgotten are the account and transaction fees which may also be charged,” she said.

“I suggest people look at alternatives to credit wherever possible. If you must use your credit card, always keep track of what you spend, keep receipts, check transactions on statements and try to pay the entire bill by the due date to avoid interest.”

For more information on money matters download a copy of How to be Consumerwise from www.fairtrading.qld.gov.au or by calling 13 13 04.

Media contact: David Smith 3225 1005 / 0409 496 534