2/7/07
People are being warned about the dangers of debt as Australians continue to rack up record amounts of household debt which last year hit $1trillion.
Consumer Protection Minister Sheila McHale today urged consumers to be aware of potential debt traps and to seek help if they get into financial difficulty.
"It is important that consumers carefully navigate the maze of credit options to ensure they avoid debt traps - especially as interest rates continue to rise," Ms McHale said.
"Increasing consumer debt and the prospect of interest rate rises are putting significant pressure on households to manage their finances and meet loan obligations."
The Minister today launched two new guides called 'Credit and Debt' and 'Choosing and Using Your Credit Card' to make consumers aware of prudent budgeting and the benefits of shopping around for the best loan and credit card product.
"A one per cent difference on an average 30 year home loan of $359,000 can result in the borrower paying $90,000 more in interest," she said.
"National credit card debt has hit a record high of more than $39billion or about $2,000 per person."
"While the interest rate is important in choosing a credit card, if you don't expect to pay off the balance each billing cycle, it is also important to pay more than the minimum monthly repayment.
"Paying only the minimum repayment on a $3,000 debt can keep you in debt over many years and add thousands of dollars in interest."
The two publications, 'Choosing and Using Your Credit Card' and 'Credit and Debt' have been distributed to financial counsellors throughout Western Australia.
Consumer Credit Legal Service solicitor, Alison Pidgeon, said the guides would be very useful resources for consumers.
"I urge anyone struggling with debts to seek help from financial counsellors who are experienced in assisting low income consumers with debt issues," Ms Pidgeon said.
Guides are available on the Consumer Protection website at http://www.docep.wa.gov.au, or by calling 1300 30 40 54. To find the nearest community financial counsellor, call the Financial Counsellors Resource Project on (08) 9221 9411.
Minister's office - 9213 6900
