In a true and free market, banks would only be able to extend credit to the amount of physical cash they had in deposit, if they tried to do what they do today, there would be a bank run before they got anywhere near todays level.
Prior to the age of modern banking the gold merchants invented the basis for fractional reserve banking.
Regulations are there to stop over exuberance in banking, and a regulated market is not a free market.
Any expressed market opinion is my own and is not to be taken as financial advice
Credit cards are very toxic financial products and minimum repayment is their worst feature. They are tools for buying things online without risking your own funds - and making use of VISA/Mastercard protection. That's about it. I can't believe the people out there doing retail therapy every weekend.
I have an open credit limit limitation for.... $13,000. I've never had a balance over $3,000 at any particular point and have no idea why it keeps increasing. If I accept it, I think they will offer to increase again in a few months. It's just a trap.
I've never seen anybody do a cash advance on a credit card before.
Quote:
“Our research shows 42% of young people under the age of 24 have between $10,000 and $30,000 of personal debt, not including a mortgage,” said Parsons.
I would wager this is mostly car loans. I've never understood the need to make endless car repayments - if you buy an old ride, you would still be far ahead even if you have to replace the engine / transmission at some point. I chose to get an old car and invest some money into tools to keep it going.
Let me assure you that this isn't one of those shady pyramid schemes that you've been hearing about. No sir, our model is the Trapezoid which guarantees each investor an 800% return within hours. Those who can, do. Those who can't, teach. "It's an itchy blanket, it's designed to remind you how lucky you are"
Young Aussies struggling with debt, and we’re not even talking mortgages yet Link Gen Y Australians are increasingly taking on debt, and that’s before they even get to their first mortgage, according to RateCity’s Consumer Study August 2014.
The new research has revealed that respondents aged under 24 received their first credit card at an average age of 20. Of those who are 65 and older, the average first credit card age was 34.
CEO of RateCity Alex Parsons said that the trend is worrying, with young Australians taking on high levels of debt.
“Our research shows 42% of young people under the age of 24 have between $10,000 and $30,000 of personal debt, not including a mortgage,” said Parsons.
“Australians aged 24 and under are also four times more likely to get a weekly cash advance from their credit card than were their parents’ generation.”
He noted that 56% of Gen Y with a credit card have never had a $0 balance on their card in the past year, with 63% unaware of the interest rate they are paying.
“It’s a real concern, given that the average credit card rate is close to 17% – that’s a lot of interest we’re talking about there,” he said.
Credit card use is on the increase, with 1117,000 more incremental cards on the market now than last year, bringing the total to 15.5 million in May, according to the Australian Bureau of Statistics. RateCity noted that Gen Y was the most likely to sign up.
Parsons pointed to a shift in the way money is used – becoming a cashless society – that is potentially making people see funds as disposable.
“These are alarming new statistics and we think a number of factors are at play here, but regardless of the causes I’d urge young people to get in control of their money today to avoid a financial nightmare down the track – starting life in your 20s with tens of thousands of dollars can be crippling,” he said.
Like taking candy from babies. 22% interest, wow now thats what you can helping out a mate. Peter
I once listened to a conversation with a pharmacist who worked in the industry before prescription heroin was made illegal in 1953. He said that while it was legal addicts came into the pharmacy for their shot and they were quite easy to deal with, but after it became illegal those people who were law abiding albeit with an addiction, suddenly had to hold up TAB agencies and Liquor stores to fund their habit. They bought from dealers who supplied varying quality drugs and overdosed when they got a high strength batch.
I'm not convinced that excessive controls are the best answer that we have to either drugs or credit.
Agree 100%
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be rising.
Drugs are ten times easier for a consumer to understand.
Credit, well, its not called predatory lending for nothing.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?
The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly. Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
Drugs are ten times easier for a consumer to understand.
Credit, well, its not called predatory lending for nothing.
Agree 1000%
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be rising.
Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.
Forum Rules:
The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.
Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.
Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.
This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.
Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ
Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy