Credit Cards 2019

If you  applying for a new credit card or plan to raise the credit limit of an existing card to cope with your Christmas spending spree you could be in for a shock. The screws are being tightened on Australia’s debt obsession.

As of 1 January 2019, new credit card limits will be based on what you can afford to pay off over a three-year period. Existing card balances will be unaffected. Lenders currently assess whether you can afford to repay a fixed proportion of your credit limit – typically 3 per cent a month. The new regulations, announced by ASIC last September, could typically result in maximum credit card limits on new cards being cut in half.

Now as well as considering your income, the three-year period must factor in the card’s fees and the highest applicable interest rate, which is usually the cash advance rate. It also has to consider the potential costs you’ll face from other cards or loans. Recently released RBA figures show the number of credit card accounts dropped to 15.97 million in November 2018, making it the lowest level of active accounts since March 2015.

It looks like more Aussies are cutting up their credit cards and using debit cards.