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Will responsible lending law changes make credit card churning easier?

Mattg

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The federal government announced on Friday it plans to loosen the responsible lending laws implemented a few years ago to make it harder for consumers to access credit. These laws had resulted in greater scrutiny from banks when applying for credit cards and home loans.


Will this make it easier to churn credit cards going forward?
 

p--and--t

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The federal government announced on Friday it plans to loosen the responsible lending laws implemented a few years ago to make it harder for consumers to access credit. These laws had resulted in greater scrutiny from banks when applying for credit cards and home loans.


Will this make it easier to churn credit cards going forward?
The very question I asked myself yesterday when I heard the news. Looking forward to the answer being yes.

Reducing the interest rates by 0.1 of a % will make no impact on recharging the economy considering most of the banks funding is coming from overseas and they regularly do not pass on significant changes to interest rates anyway. That's not counting the fact they were already in reduced profits due to covid and they have responsibility to shareholders. Word on the ground is that they are desperate to lend but afraid to because of the current regulations. Some businesses are desperate to borrow but can't get funds under the current regulations.
 

exceladdict

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Fascinating isn't it. Digital Finance Analytics did a post last week slamming the changes.

Fundamentally, I do agree that borrowers should be able to be the ones who decide whether they can cut back on their expenses to take out a loan. To play a stereotype - a track record of buying lots of ubereats shouldn't be assumed to continue when one then has a home loan repayment to meet.

The other change compared to pre-these-laws is that we now have comprehensive credit reporting, which won't be undone, so the pros (or cons) that brings are here to stay. (Currently dealing with an incorrectly reported duplicate account on my illion record which is not proving easy to remove).
 

RAM

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Fascinating isn't it. Digital Finance Analytics did a post last week slamming the changes.

Fundamentally, I do agree that borrowers should be able to be the ones who decide whether they can cut back on their expenses to take out a loan. To play a stereotype - a track record of buying lots of ubereats shouldn't be assumed to continue when one then has a home loan repayment to meet.

The other change compared to pre-these-laws is that we now have comprehensive credit reporting, which won't be undone, so the pros (or cons) that brings are here to stay. (Currently dealing with an incorrectly reported duplicate account on my illion record which is not proving easy to remove).
Trouble is that the finance industry aims to profit from human weakness.

I got to know the man in charge of the world's largest issuer of credit cards (over 120 countries when I last spoke with him in early 2000s).

He knew I am a bit of a cynic (pragmatic?). In one conversation I decided to 'bait the hook' a little so I said:

"It is very hard to see the difference between you and drug dealers. You try to hook people on ever increasing credit, charge outrageous interest rates & profit from their dependency."

His response: 'No, you're totally wrong. This is legal.' which he said laughing.

He then went on to describe the algorithm used to 'convert' people who pay off in full to 'rotaters' (those who shift balances/use from card to card as they max out their credit limits).

The algorithm identifies patterns in your spending (what you buy & when, and when you tend to do this seasonally etc). It then sent out offers to increase your credit limit at regular intervals preceding these typical spending peaks identified. The aim is to increase the limit to the point when you out-spend your ability to fully pay off the amount outstanding and start paying interest as well.

He conceded that this does not work 100% of the time (due to those damned AFFers....) but normally will convert 70% or so over a 30 month period.

This got reined in slightly with you having the ability to opt out of receiving offers (introduced in 2015 I think).

Given the decreasing level of financial literacy in Australia (& elsewhere) with such powerful vested interests (& political donors) - the consumer needs all the protection possible.

BTW: Australia seems to have the least consumer protection for credit cards in the OECD. In Europe fraud protection generally only sees a CC holder liable for the first 30 Euros, GBP 25, and in the US the first USD 25. In Australia there is no limit & in the early 2000s (coincidentally following some generous donations at the Federal level) the protections for both credit & debit cards was virtually removed.

You may remember some of the changes to the T&Cs:
  • signatures no longer able to be used
  • PINS mandatory
  • Issuer previously had to prove that you did not take adequate security
  • Became - cardholder had to prove they took adequate security (MASSIVE change in onus of proof)
Standard operating procedure became, as someone has got your details then you obviously did not take adequate precautions.
 

lonewolf

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I have been knocked back by NAB and ANZ, I stopped applying . ( I do already have other cards, but previously i had a ANZ BLack while having more cards and this time i had applied for a platinum).
 

knagelli

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I have been knocked back by NAB and ANZ, I stopped applying . ( I do already have other cards, but previously i had a ANZ BLack while having more cards and this time i had applied for a platinum).
Did they give any specific reason or is the same stereotype response that you do not meet the criteria. Cheers
 

Brissy1

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Fascinating isn't it. Digital Finance Analytics did a post last week slamming the changes.

Fundamentally, I do agree that borrowers should be able to be the ones who decide whether they can cut back on their expenses to take out a loan. To play a stereotype - a track record of buying lots of ubereats shouldn't be assumed to continue when one then has a home loan repayment to meet.

The other change compared to pre-these-laws is that we now have comprehensive credit reporting, which won't be undone, so the pros (or cons) that brings are here to stay. (Currently dealing with an incorrectly reported duplicate account on my illion record which is not proving easy to remove).
yes. Although I'd actually like to be the learned judge's stereotype ... cutting back on dinning on "Wagyu washed down with the finest shiraz" every day. Perhaps we should have a "Judges Dinner" for those that don't have a mortgage.
 

BAM1748

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I think it will make churning cards easier but I don't agree it should. There are many poor sods out there caught in the cycle of ever increasing debt and I don't think smart to make it too easy to get another card.
 

lonewolf

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Did they give any specific reason or is the same stereotype response that you do not meet the criteria. Cheers
no reason, worst part was I had excellent credit rating as well as always paid off all my credit cards in full before the due date. I think it was just the tighter rules with the amount of credit cards i had.
 

Brissy1

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Come to MEL for one the (in)famous Olive Tree dinners. Post COVID of course.
I searched forums to understand your post; found "...ordered nine waygu steaks in our group", I understand!
 
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EestiTiger

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(Currently dealing with an incorrectly reported duplicate account on my illion record which is not proving easy to remove).
By way of reference, I had a duplicate entry on my illion record (via Credit Simple) and submitted a correction request on the 5th of Sept. Reply back from them today:

As part of our amendment process illion are required to communicate with the credit provider who listed the record in dispute.

In this instance, we have attempted to contact St George in relation to the dispute raised but did not receive a response.

As a result illion will be closing this dispute in your favour and subsequently removing the listing from your credit history.


I thought that was interesting that no comms from the bank and they would rule in your favour.
 
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To add a bit of a UK slant on things...

The federal government announced on Friday it plans to loosen the responsible lending laws implemented a few years ago to make it harder for consumers to access credit. These laws had resulted in greater scrutiny from banks when applying for credit cards and home loans.


Will this make it easier to churn credit cards going forward?
Does ANEX AU still allow churning? Not so much in the UK anymore, if you don't do it in the right order then you have to go 24 months without any card at all (not just between sign ups like the chase 5/24 rule in the US requires) before you can apply and earn the bonus.

The very question I asked myself yesterday when I heard the news. Looking forward to the answer being yes.

Reducing the interest rates by 0.1 of a % will make no impact on recharging the economy considering most of the banks funding is coming from overseas and they regularly do not pass on significant changes to interest rates anyway. That's not counting the fact they were already in reduced profits due to covid and they have responsibility to shareholders. Word on the ground is that they are desperate to lend but afraid to because of the current regulations. Some businesses are desperate to borrow but can't get funds under the current regulations.
In the UK the % rate is the lowest it's been in 300+ years, there is talk here of going into negative interest rates i.e. you pay the bank to hold your money, essentially. Let's hope that doesn't happen...

By way of reference, I had a duplicate entry on my illion record (via Credit Simple) and submitted a correction request on the 5th of Sept. Reply back from them today:

As part of our amendment process illion are required to communicate with the credit provider who listed the record in dispute.

In this instance, we have attempted to contact St George in relation to the dispute raised but did not receive a response.

As a result illion will be closing this dispute in your favour and subsequently removing the listing from your credit history.


I thought that was interesting that no comms from the bank and they would rule in your favour.
In the UK that's normally dealt with by having a note on your credit report. Not ideal as you'll then notice applications won't auto approve as someone needs to manually review. Having it deleted instead would be much preferred, alas it doesn't happen!
 

Robbie Ensor

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no reason, worst part was I had excellent credit rating as well as always paid off all my credit cards in full before the due date. I think it was just the tighter rules with the amount of credit cards i had.
Just curious, how many active cards did you have at the time? I've only 1 at the moment and looking to apply for the ANZ Black card but the Qantas card I cancelled nearly 3 months ago is still showing as active on my credit score.

I had the same issue as you when the new responsible lending rules just came in, being rejected 3 times which put a big dent in my credit score and want to avoid that again. I've an excellent score now (was very good at the time) but just wondering if I'm safer waiting until the Qantas card disappears before applying for it.
 

greennick

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The algorithm identifies patterns in your spending (what you buy & when, and when you tend to do this seasonally etc). It then sent out offers to increase your credit limit at regular intervals preceding these typical spending peaks identified. The aim is to increase the limit to the point when you out-spend your ability to fully pay off the amount outstanding and start paying interest as well.

He conceded that this does not work 100% of the time (due to those damned AFFers....) but normally will convert 70% or so over a 30 month period.

This got reined in slightly with you having the ability to opt out of receiving offers (introduced in 2015 I think).
This isn't up to date information. Banks can't send balance increase offers. If anyone receives one, it's illegal.
 

exceladdict

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By way of reference, I had a duplicate entry on my illion record (via Credit Simple) and submitted a correction request on the 5th of Sept. Reply back from them today:

As part of our amendment process illion are required to communicate with the credit provider who listed the record in dispute.

In this instance, we have attempted to contact St George in relation to the dispute raised but did not receive a response.

As a result illion will be closing this dispute in your favour and subsequently removing the listing from your credit history.


I thought that was interesting that no comms from the bank and they would rule in your favour.
Interestingly, after submitting a complaint over the weekend I had a response to my earlier email that they're now contacting the issuer of the duplicated record to clear it up. Hopefully this will be clarified quickly. Thanks for the heads up.
 

RAM

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This isn't up to date information. Banks can't send balance increase offers. If anyone receives one, it's illegal.
You did not read the last line of what you quoted of my post - right up-to-date...
RAM said:
This got reined in slightly with you having the ability to opt out of receiving offers (introduced in 2015 I think).
All financial institutition sent out emails about whether you wished to receive automatic credit limit increase offers in the future. The elections made then still apply today.
 

p--and--t

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there is talk here of going into negative interest rates i.e. you pay the bank to hold your money, essentially. Let's hope that doesn't happen...
Cant recall where, but I read somewhere the head of the Reserve Bank (AU) is against this course of action. He was fearful we would end up like Japan going nowhere for decades and wants the Feds to do something dramatic to stimulate the economy and wage growth as he is basically out of bullets.
 

CaptJCool

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He then went on to describe the algorithm used to 'convert' people who pay off in full to 'rotaters' (those who shift balances/use from card to card as they max out their credit limits).

The algorithm identifies patterns in your spending (what you buy & when, and when you tend to do this seasonally etc). It then sent out offers to increase your credit limit at regular intervals preceding these typical spending peaks identified. The aim is to increase the limit to the point when you out-spend your ability to fully pay off the amount outstanding and start paying interest as well.

He conceded that this does not work 100% of the time (due to those damned AFFers....) but normally will convert 70% or so over a 30 month period.

This got reined in slightly with you having the ability to opt out of receiving offers (introduced in 2015 I think).
Wow. How nuts can it get.

The basic ordinary “family” household would at a minimum spend no more than $40,000 a year..... renters v home-owners would have some lifetime differences as mortgages do get paid off but rent is never ending.

Abolished in 2015, yea, but it hasn’t stopped unsolicited offers asking you to opt in, multiple times or to dress up the offer as “roast pork”....
Numerous emails to that effect...still when it comes to paying for J or F fares, I suppose you need a card to shovel on the cost...

It would very easily spiral out of control ....
 

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