Hidden Debt That No One Is Talking About
Feb 29 2016
Hidden Debt That No One Is Talking About (And It Involves You)
A recent article by The Age senior writer, Matt Wade, begins by expalining that there is very little debate about personal household debt in Australia but much open debate "about the magnitude of government's borrowings, even though they are comparatively low by global standards."
The article goes on to say, "... the level of household debt gets relatively little attention even though it's among the highest in the world. In the past two decades the debt owed by households has risen from about 80 per cent of combined income to more than 180 per cent. A fresh surge in borrowing driven by the recent boom in house prices, coupled with slow wage growth, has pushed the debt-to-income ratio to new heights."
Comments by NCPA's CEO, Phil Johns were reported in the article and concerned recent research outcomes from independent researchers CoreData. However, it is concerning to NCPA that Small Amount Credit Contracts (SACCs) are confused with ‘payday' loans or put in the same category. A SACC is very different to a payday loan.
Payday loans are illegal. The concept of borrowing money and having to pay it back on a borrower’s next pay day has been made illegal. What has taken the place of such loans are now SACC loans. The new legislation governing SACC loans, including a wide range of consumer protections, came into being on 1 July 2013. SACC loans are one of the most highly regulated and safe personal loans in the world.
The NCPA finds it frustrating that SACCs are being referred to colloquially as payday loans, because the connotations of the word have a detrimental effect on the view of this financial product, which is used by millions of Australians who can’t, or don't wish to, access traditional forms of credit.
Click here to read The Age article in full.