Credit card debt now $600M

Press, 13 January 1987, Page 2

Credit card debt now $600M

PA Wellington New Zealand has worked up a credit card debt of about $6OO million since card use took off in the 1980 s, Reserve Bank statistics show. In January, 1981, outstanding credit advances totalled $95.3 million and have steadily increased since then to about $6OO million or about 10 per cent of total retail spending.

The director of Wellington’s Inner City Ministry, Ms Helen Walch, said that debt is emerging in the form of human casualties, needing budget advisory services around New Zealand.

Since the ministry began a budget advice service last year it had found that more than half its clients' problems stem from overuse of credit cards, she said. The victims were a mixture of families and young people and in some cases the debt amounted to three months’ salary. “The credit card companies are concerned to

make people buy, and that’s why companies will allow credit card transactions,” Ms Walch said. "The purpose of the card is just to seduce people to spend and they are.

"It’s sort of like unreality you don’t see money passing through your hands when you have a credit card. People put things on their cards without realising they’re going so high and suddenly they’ve got a huge bill and they can’t work out how they’re going to repay it” Once they had worked up a big debt they could not afford •to do more than pay the interest on it she said.

Credit card companies should take more responsibility for the amount of credit extended to clients and the upkeep of payments.

Consumers* Institute assistant director, Mr David Russell, said the rise in interest rates would have a flow-on effect for credit card users.