The global financial crisis has dealt a heavy blow on the banking system. Before the shakedown, costs were considerably low and liquidity was overflowing. With the crisis there was a heightened rivalry to get wholesale funding, which entailed cash loans from other entities, making prices very volatile. In fact, it has been said that capital may remain a scarce commodity for the next ten years. Funding will consequently be very costly for everyone.

It only follows that when the capital cost increases so do the funding cost. For instance, for people who are selling their mortgages, they have two options, which are to accept a reduction to their profits or pass on the price. The Australian banks have chosen their option that is to increase interest rates after several weeks of decreasing profit margins. Clearly this does not coincide with the steps taken by the Reserve Bank of Australia. Credit card providers are more likely to follow suit.

Incidentally, GE capital, a subsidiary of the General Electric Company of the United States and also one of the major non-bank entities in the finance sector in Australia has opted to leave the mortgage and car loan markets during the peak of the crisis at the closing of the year 2008. This is a clear example of choosing to accept the inevitable because GE knows that passing the cost to the consumers can be counter-productive and eventually leading to losses.

The group transferred their home loans to the Commonwealth Bank and sold out their Wizard Home Loans. What was left of the mortgage books, with $9 billion worth in assets, is about 60% less than its original size and is in the process of being ran down. Potential buyers are lining up regularly in the doorstep of the company, which will only sell with the right offer. Because the company has freed itself from a problematic industry, it now can focus on improving its existing businesses as it provides the engine for its credit card programs, which is operated by retailers like Myer and Harvey Norman. The company provides the needed finance for business secured against equipment and supervises business automotive fleets.

GE Capital Australia has been a major player in the domestic market since 1995 by buying the Coles Myer’s cards business. With the decisions made by the company as a response to the financial crisis, they hope to correct the growing perception they are trying to charge exorbitant interest rates on their marginalized customers. This perception is opposite the existing practices of the company where 80 percent of its credit borrowers were not charged with interest while 70 percent were repeat and loyal clients. GE Capital has the advantage of keeping their clients satisfied by not choosing to increase interest rates. They can do this by ridding themselves of funding-strapped endeavors and working on what remains a viable business, the credit card program.

This new record is a clear indication of how much Australians are relying on credit cards to maintain their lifestyles. This is not at all related to a post-Christmas spending binge so the only rational explanation is that the spending can continue over the next few months while repayments decreases significantly.

Many have speculated that the cutting back of repayments may be partly due to the rising unemployment rates. A looming recession hovers at the horizon. Many can no longer afford to make the necessary payments and are forced to carry the heavy debt. In February alone, a 7.1 % have decided to reduced or stop their repayments.

The new figures come at a surprise especially when consumer spending was relatively weak at the start of this year. Then the Australian credit card debt ballooned by 1.7% setting an all time high record of $45.4 billion. When calculated, this places $3149 average debt for every cardholder. In truth, the latest data collected by the Reserve Bank indicates that the growth rate of credit card debt is showing signs of slowing. However, there is a widening gap between spending and repayments, which is a clear symptom of the present reality that we are entering into a recessionary period.

It has been two months now that repayments have been cut back and there are indications that it will be a continuous trend. Many economists are getting concerned as they see spending slowing down but balances keep on rising. However, some positive news in the figures given by the Reserve Bank is the trend that veers away from cash advances. Interestingly enough, in February, cash advances decreased by 1.8 % to levels that have not been observed since the start of the credit crunch. In fact, it was the 21st consecutive month that the number of cash advances has been significantly reduced from that of the previous month.

To sum up, consumers have spent $17.1 billion using their credit cards in the February figure, which shows a slight increase as compared to the data in January, but it is way below the monthly average for the entire year of 2008.

To stress the point, Ms. Gillard disclosed that there are one hundred and fifty thousand Australians each month who are approved to have a credit card. This staggering amount only proves that application is not stringent and approval is easy. Nowadays, anybody can get a credit card, which only shows how much we rely on plastics to maintain our standard of living.

With this new policy of the government, the Labor Party made sure that banks will be penalized if they offer credit limit increases as they have regularly done so in the past. The only way to make this practice legal is when the consumer decides to accept the service.

Moreover, credit card statements will drastically change with some important disclosures. This will include a section on the length of time needed to fully pay the credit due especially when the card holder only pays the minimum fee. The interest to be paid should also be computed, showing the charges during the entire duration until the balance is fully paid.

This is pure transparency without any hidden agenda that banks and credit providers can potentially earn huge sums from the interests on installment payments. Moreover, the practice of getting a high credit limit somehow perpetuates the culture of overspending more than what is earned or needed. By clearly showing how credit card charges you over the years, it is hoped that people will step back and re-think how they spend. Actually, many people feel burdened by their credit card bills because they do not get any help from the providers on using their card responsibly.

When the global financial crisis hit in 2008, credit card balances have dropped. This may be because people strongly felt the urge to be more mindful of their spending and reducing their debt so as to decrease the interest they pay. However, at the opening of this year, the balances have picked up and even set a record high of an estimated $44 billion according to the information supplied by the Reserve Bank of Australia. Only this June, Australians owned 13 million and more credit cards at a combined credit limit of approximately $122 billion.

Ms. Gillard, if elected, hoped to go in dialogue with major financial institutions as well as consumer groups on possible reforms to the present credit card practice. She believes that by providing the whole picture of the credit card set up through complete information, people will be guided. They will also be able to put up their own measures on limiting their credit card use by not accepting higher credit limits.

However, credit card fraud has been an issue with some opportunistic cab drivers, who use their passengers’ information to access their credit cards. The taxi industry faces this problem with urgency, fearing that the deception of a few may adversely affect the rest. Consequently, the Public Transport Ministry is determined to stop this criminal offense against unsuspecting passengers. They warned credit card users to be more vigilant especially when cab drivers declare that their terminal is broken. The government is set to penalize those with broken terminals by stopping them from plying the streets and potentially robbing their passengers.

Passengers are duped because they allow the cab drivers to process their payments manually. Unlike electronic record-keeping, manual transactions are more prone to fraud since dockets can be changed just after the customer has affixed his or her signature. In addition, the personal information of the credit card holder is not secure and easily accessed by other people particularly during the cashing in of the docket.

Credit card fraud is actually very common especially in online transactions. Banks have equipped themselves with anti-fraud programs to better protect their customers. As a way to check the criminal acts of some cab drivers, the government fines those that do not use their eftpos terminal. The fine is set at $292, which will be collected on the spot. To help stop the credit card fraud in the taxi industry, passengers should do their share by reporting cab drivers who do not accept credit card payments or use their eftpos terminals. Paper vouchers used in processing fares should not be accepted. Moreover, cab drivers who tamper with the credit card details can be banned from the streets or worst, be liable for criminal charges.

Moreover, when passengers lodge complaints to the authorities it should be accompanied by substantial information. In fact, a third of the complaints received by the authorities cannot be acted upon due to inadequate information. It is crucial that when you agree on a manually processed credit card transaction, you get a receipt. You also need to take note of the taxi number, time and date of your trip as well the pick-up and drop-off points. These pertinent details will be of big help in going after the cab drivers who do not abide by the law. As a safety precaution, always check your credit card statement so that at the first sign of fraud, you have the evidence to bring to the bank and the federal office.

In using your credit cards, the responsibility of making sure all transactions are in correct order should begin with the customer. So as to continue enjoying the ease and convenience that credit card offers, we should be vigilant and be more mindful of protecting our money, something which we have worked hard for.

In real value, it appears that credit cards purchases by March were already 19.9 billion dollars as compared to 2.1 billion dollars the previous year. If we were to include cash advances, the increase amounts to 2.1 billion dollars or an 11.6 percent based from the same month last year, garnering a total sum of 20.9 billion dollars. The increase is a substantial amount compared with the average growth rate of the last five years, which was at 7.1 percent.

Last March, the number of transactions made was 139.4 million having an average transaction size totalling to $150.6. Moreover, repayments have grown faster than the latest average, increasing to 8,7 per from March of 2009 to March of this year. It is markedly comparable to the 7.9 percent average over the last five years.

The overall sum of credit and charge card outstanding balances increased to 47.1 billion dollars in March of 2009, which is a rise totalling to 2.8 billion dollars or 6.4 percent from the previous year. This increase is slightly more than half of the 10.7 percent average annual growth rate of outstanding balances looking at the last five years figures.

Moreover, the average credit or charge card account balance dived to 0.2 percent to $3242 in March from February’s $3250. This is a 4.6 percent increase from the pegged average of $3100 in March of last year. The rationale behind this rise in the average balance, which is considerably slower than the total sum of outstanding balance, was the rise of 1.6 percent of the number of credit and charge card accounts. This figure was the result of looking into over the year numbers up to March, or from 14.3 million to 15 million.

Looking into the total credit and charge card transactions, only a 0.7 percent increase was tallied in the value of cash advances, which was 1.04 billion dollars in March. EFTPOS transactions inclusive of purchases and cash-outs totalled to 18.939 million valued at 12.117 billion dollars in March as compared with 158 million transactions at $11 billion dollars in March of 2009, increasing at 15.4 percent in number terms or a 9.7 percent in value terms.

We are all aware that many people just cannot live without their plastic. The lifestyle steeped in consumerism and materialism have pushed people to spend more than what they earned. Having a credit card, therefore, allows you to make purchases that you cannot afford for the time being. The deffered payments are very convenient because you can pay later when your salary check comes in. A credit card is a lifesaver in many instances.

Since a credit card is an intrinsic element in our modern lifestyle, the providers should be checked by government not to abuse their current market position. Due to this fact, the RBA has been deliberating how to beef up competition so that the credit card providers will be pressured to lower their fees. In fact, good progress has been made on this line, but the question still remains if the promotion is adequate.

Going back to the card payment reforms undertaken by RBA in 2007-2008, we discovered the following reforms. Reduced costs have been provided to merchants, competition was heightened and price signals have further improved. There is also increased transparency and enhanced access to one’s credit card accounts. This has been validated by the bank’s clear declaration of their policies on fees to new clients so that the individual is always aware and informed of the charges he will incur in his card usage.

Prior to the reforms, the interchange fees of credit cards have reduced from 95 basis points to 50. However, the said fee is still way too high with competition not being able to make a strong influence. This is why regulation remains and not yet discarded.

The RBA in August of 2009 did not implement a ruling to reduce further the interchange fees to 30 basis points. The board believes that good progress is underway by the industry. However there is still much to do especially in bringing back the confidence of the consumers that fees would be reduced. For now, direct regulation is still in place but leaving the door wide open for card providers to do their part in making their fees consumer-friendly.

The last few weeks, the RBA has announced a couple of interest rates hike in 2010. Despite this, Australians are still pretty confident about the country’s economic growth. This was the finding reported by the Westpac-Melbourne Institute, which conducted a consumer sentiment survey for the month of April. This is confirmed when you look at the average credit card balance and find the confidence of consumers slightly noticeable.

The said balance is beginning to increase very gradually, looking at a 12 month performance. However, it is still apparent that consumers are still exercising caution. On the other hand, debit cards spending has overtaken that of credit cards. This only explains that consumers prefer to spend their own money rather than depend on credit. This is very obvious in the new statistics showing debit cards use increasing by more than 30 percent in the last 12 months. This is very high compared to the 6.69 percent rise with credit cards usage.

Consumers are favoring the double features offered by debit scheme cards, which are primarily being able to use your money while having access to credit card. When it comes to these tow cards, namely debit or credit card, Australians seem to choose the former. Rather than borrowing, practical Aussies are spending the money they already have. The financial crisis of 2008 has clearly left a mark on the behavior of the people especially in spending for basic goods and services. Many people have changed their past attitude of spending more than they have earned and relying more on credit to maintain an expensive lifestyle.

The research was conducted when the earlier uproar regarding the decision of Westpac to add interest on credit card interest and transactions. As one of the big banks in the country, many people view Westpac and its contemporaries in a not so pleasant light. Westpac gains an even more negative reputation because of a series of decisions that do not favor the customer, but more focused on increasing profits for the bank.

This new turn of events by a major bank seems ill-time especially when data shows that the big banks have accumulated $45 billion in interest. Not a bad performance for these major players in the banking industry, so customers are very much offended because they are obviously being taken advantage.

Many customers will surely transfer their money on smaller banks with friendlier rates. Many smaller players do not impose charges on credit card transactions. Moreover, they do not impose interest on interest, which Westpac intends to do.

The Consumer Group Choice has identified several institutions that do not put interest on interest like the Bendigo Bank, Heritage Building Society and Teachers Credit Union. The aforementioned banks are found to be the cheapest among the many credit card providers. A substantial eighty percent difference compared to the rate used by big banks.

Moreover, according to Choice, the Australian credit cards will not thrive given the new rules being implemented in the UK. These new rules include several changes. It requires that repayments be alloted to a portion of the debt yielding very high interest rates. Unsolicited increases in credit limits should be prohibited so that the user can properly manage his or her credit card use. Lastly, consumers should be able to have the choice to refuse any increase in interest rates. These new measures are seen to be highly beneficial to customers with an estimate eight hundred million dollars savings within a year.

However, Choice asserts that those banking practices banned in the UK is still pretty mainstream Down Under.

According to one research, airlines and taxis lead the lot in their charges reaching as high as ten percent. To be more particular, both Qantas and Tiger airways in 2009, were found to be charging their passengers with a surcharge of $7.70 each. In truth, the actual cost to the airline in processing credit card transactions is only 1 percent. Nonetheless, Qantas claims that it hardly benefited from such surcharges.

It is the corporations or entities that dominate the market such as the airlines and taxis that apply such inflated charges on credit card purchases. The Reserve Bank in 2003 allowed such fees to be introduced in an attempt to allow these companies to recover the cost they incur in processing credit card transactions. This was the result of the Reserve Bank’s abolishing the “no surcharge rule” and allowed the “fee for service” on consumers.

The surcharge was meant to promote a health competition among the various merchants and ultimately lessen the costs associated with credit card use. However, the unintentional effect to this wisdom is that those companies yielding high market influence were allowed to impose ten percent charges on their credit card consumers.

Early this month, the NSW government has initiated a research project that will investigate on the excessive credit card surcharges. If its suspicion is affirmed, it aims to remove these fees once and for all.

It is true that businesses need to be given the chance to have their costs covered. However, it is not reasonable for them to pass it on to the consumers just because they rely on their plastics. This was the opinion of a trading minister, Virginia Judge, when speaking to the Daily Telegraph.

It is actually the sole responsibility of the Reserve Bank of Australia to regulate the Australian payments system covering credit, debit and EFTPOS cards. Once the findings are disclosed, the NSW government will use it to put pressure on the RBA as well as the Federal Government so that a more reasonable and just surcharge system may be worked out.

Many stores offer store cards, offering you customer discounts, added warranties and extended credit. However, this might be too tempting for you to resist that every time a certain product is offered for sale to special members, you go rushing to the store. Remember that the interest rates of these store cards may be higher than credit cards. The only way you can avoid paying much is by paying your bills on time so that you will not be subject to really considerable interest charges.

In choosing your credit card, find one that suits your lifestyle especially your spending pattern. If you often travel, then a credit card that offers air mileage might be really beneficial. In cases wherein you use your card for extended credit and your income will not be able to pay the full balance each month, you could opt to pay the basic charges but with interest. If this is the most likeliest arrangement for you, then better choose a card with lower rates. Usually, cards with low rates do not offer an interest-free period.

Interest-free period are incentives given by most credit card issuers to encourage customers. If you are using your plastic for everyday expenses like your groceries or gas, you can maximize these zero interest days. Just make sure you settle the full balance every month. Doing so will give you the extra advantage of more interest free days on your purchases. You also get rewards and discounts as incentives for being prompt in your payments. However, pay close attention to the annual fees on the rewards that are being offered.

It is pretty obvious that paying on time saves you from paying on interest. Managing your finances is no rocket science. It only entails discipline and self-control. You can help yourself by sticking to your budget and match your lifestyle with your income. You are very fortunate since there are a lot of options in the market for consumers. Aside from your big name banks, there are also credit unions, building societies, community banks, shops and banks operating on the internet. Frequently, local or small-scale banks offer very low rates than the more popular and big names because they need a more extensive consumer base. Moreover, these issuers are often non-profit, which allows them to lower their rates. Doing so, you can apply for loans with discounted interest rates and receive bonuses on your time deposits. You can ever request to waive your fees on your savings account and credit cards. This particular benefit is not only for loyal customers, but also for consistent big spender. If you make a whole lot of purchases every year, some banks may actually waive your annual fee and even increase your maximum credit. This may be given as a reward, but it could also be the bank’s way of wanting you to always use your credit cards. Be very wary, therefore, of these rewards for it is an additional temptation. You can maximize this advantage by making responsible purchases and not just aim to have your annual fees reduced.

We all know that most credit card issuers are competing in getting more customers. They will offer initial discounts, great rewards and even insurance attachments. In choosing the credit card for you, do not only look at the freebies, but also make sure to compare the interest rates and their policies. Do not let your credit cards rule, but rather, rule them.