More Australians can't access money: report
Courtney Trenwith.    :(
May 29, 2012



More Australians are having difficulty accessing emergency funds through mainstream financial services.

More than 300,000 West Australians do not have adequate access to day-to-day financial products such as a basic banking account, car insurance or even a credit card, a landmark study has revealed.

The research by the Centre for Social Impact - backed by the University of Western Australia - shows the ability to secure as much as $3000 in funds for an emergency through the mainstream financial system is becoming increasingly out-of-reach for Australians.    :(

Instead, more people are relying on family or friends or turning to fringe credit products, such as payday lenders, who regularly charge substantially higher interest rates than banks.    :(


Such products have seen a surge in uptake in recent years.

The report, to be released today, and partly funded by National Australia Bank, found even a moderate amount of credit was crucial to accessing key household goods that go beyond a monthly budget, such as a washing machine.

The lack of access to banking services impacted on people's ability to pay for basic household items such as electricity, telephone, food, clothing, car-related expenses, repairs, rent, education, health and repayment of other debts.    :(

The report reveals 12,500 West Australians have no financial service products and an additional 293,000 are severely excluded, with only one service.

Residents in south east Perth are among the nation's top regions for financial exclusion, with more than one in five without access to basic banking services. That was 33 per cent more than the national average.

Regional West Australians also rated highly, with 20 per cent unable to access appropriate and affordable financial services.

South western Perth (18.7 per cent) and central Perth (18 per cent) also were below the national average.

Eastern Perth (11.9 per cent) was among the nation's most well-off areas, followed by northern Perth (13.3 per cent) and south western Perth (15 per cent).

Wollongong in NSW tops the nation with almost 7 per cent of adults without access to basic banking services.

The cost of basic financial services was the prime cause of financial exclusion, according to the research. The average annual combined cost of banking, credit card and either car or home insurance is $1794 annually.

A survey of financially excluded people also found the level of official identification needed to establish an account was often a hurdle, while many banks denied personal loans of less than $5000 as a personal loan, instead steering customers to credit cards that they were unable to access.

The distance to a bank branch, language and literacy challenges and poor credit records also were hurdles.

The report found capital city areas tended to have higher levels of access to credit, but lower levels of access to insurance, while country areas have lower access to credit, but very high levels of access to insurance, particularly car insurance because public transport is limited.

Many financially excluded people were reliant on government services such as Centrelink and also used fringe credit providers, such as payday lenders.   :(

NAB chief executive Cameron Clyne accepted the banking industry was partly to blame, conceding it needed to lift its game by providing affordable products to more people.

''The absence of access to mainstream financial services does preclude people from advancing socially and economically,'' he said.

''Often it's the unexpected expenses [such as] if the car breaks down or someone needs to get to a job interview.   :(

"There's an obligation for the banking system to improve financial inclusion."

The report comes just days after the federal Treasurer Wayne Swan brokered an agreement with the banking industry to provide free ATM transactions for Indigenous people in remote communities.

The study found the number of Aboriginals and Torres Strait Islanders severely excluded from access to day-to-day financial services is more than double the national average, with 43 per cent operating outside the mainstream banking system.

While there are efforts to improve access to basic bank accounts and efforts to promote low cost credit products, there is a substantial gap in general insurance where there is little movement about delivering affordable insurance products.    :(

- with Eric Johnston

Read more: http://www.watoday.com.au/wa-news/more-australians-cant-access-money-report-20120528-1zf5k.html#ixzz1wDtakLOI

Got a lot more than that Imcrook.

Thanks go to the Australian Tax Office....

;)

lucky you, well it seems a lot of people don't have, as little as $3000 for an emergency.    :( 

wrote on May 29^th, 2012 at 1:02pm:

lucky you, well it seems a lot of people don't have, as little as $3000 for an emergency.    :(

And who's problem is that?

You need to have your emergency money in cash too. No good on a card.

SOB

Many financially excluded people were reliant on government services such as Centrelink and also used fringe credit providers, such as payday lenders.    :(

wrote on May 29^th, 2012 at 1:17pm:

Many financially excluded people were reliant on government services such as Centrelink and also used fringe credit providers, such as payday lenders.    :(

And whos problem is that?

I suppose the individual person, and the governments, along with the Australian tax payer.   :(

Australia has "responsible lending" legislation, well intentioned law designed to require lenders to make sufficient enquiries to ensure the customer can service the loan.

But, as usual, the banks have grossly overreacted and now make it virtually impossible for someone on a low fixed income to borrow anything. They will only lend to people who can prove they don't need the money.

This applies to even the smallest overdraft. One bank told us that to get a $500 overdraft we had to own property!

Peter Freedman wrote on May 29^th, 2012 at 1:29pm:

Australia has "responsible lending" legislation, well intentioned law designed to require lenders to make sufficient enquiries to ensure the customer can service the loan. But, as usual, the banks have grossly overreacted and now make it virtually impossible for someone on a low fixed income to borrow anything. They will only lend to people who can prove they don't need the money. This applies to even the smallest overdraft. One bank told us that to get a $500 overdraft we had to own property!

Really whistling Pete?

Most banks won't lend small sums, full stop.

Need $5K? Go get a credit card.

FriYAY wrote on May 29^th, 2012 at 1:34pm:

Peter Freedman wrote on May 29th, 2012 at 1:29pm: Australia has "responsible lending" legislation, well intentioned law designed to require lenders to make sufficient enquiries to ensure the customer can service the loan. But, as usual, the banks have grossly overreacted and now make it virtually impossible for someone on a low fixed income to borrow anything. They will only lend to people who can prove they don't need the money. This applies to even the smallest overdraft. One bank told us that to get a $500 overdraft we had to own property! Really whistling Pete? Most banks won't lend small sums, full stop. Need $5K? Go get a credit card.

They wont give those out either.

SOB

Exactly. I don't need $5000. A small overdraft would do fine.

Sir Spot of Borg wrote on May 29^th, 2012 at 1:40pm:

FriYAY wrote on May 29th, 2012 at 1:34pm: Peter Freedman wrote on May 29th, 2012 at 1:29pm: Australia has "responsible lending" legislation, well intentioned law designed to require lenders to make sufficient enquiries to ensure the customer can service the loan. But, as usual, the banks have grossly overreacted and now make it virtually impossible for someone on a low fixed income to borrow anything. They will only lend to people who can prove they don't need the money. This applies to even the smallest overdraft. One bank told us that to get a $500 overdraft we had to own property! Really whistling Pete? Most banks won't lend small sums, full stop. Need $5K? Go get a credit card. They wont give those out either. SOB

Barely a week goes by without me being offered a new credit card. 

Well, jolly good, I'm delighted for you.

Peter Freedman wrote on May 29^th, 2012 at 1:49pm:

Well, jolly good, I'm delighted for you.

Well you're easily pleased.  I just throw them straight in the bin.  Obviously they're not as tight with credit as some people claim.

... wrote on May 29^th, 2012 at 1:57pm:

Peter Freedman wrote on May 29th, 2012 at 1:49pm: Well, jolly good, I'm delighted for you. Well you're easily pleased.  I just throw them straight in the bin.  Obviously they're not as tight with credit as some people claim.

Heh. Lucky you. Ever tried to actually take them up on it? Or are you rich?

SOB

Sir Spot of Borg wrote on May 29^th, 2012 at 2:11pm:

... wrote on May 29th, 2012 at 1:57pm: Peter Freedman wrote on May 29th, 2012 at 1:49pm: Well, jolly good, I'm delighted for you. Well you're easily pleased.  I just throw them straight in the bin.  Obviously they're not as tight with credit as some people claim. Heh. Lucky you. Ever tried to actually take them up on it? Or are you rich? SOB

I've already got a credit card that never gets used to even a quarter of it's limit.  Why would I need another?

... wrote on May 29^th, 2012 at 2:19pm:

Sir Spot of Borg wrote on May 29th, 2012 at 2:11pm: ... wrote on May 29th, 2012 at 1:57pm: Peter Freedman wrote on May 29th, 2012 at 1:49pm: Well, jolly good, I'm delighted for you. Well you're easily pleased.  I just throw them straight in the bin.  Obviously they're not as tight with credit as some people claim. Heh. Lucky you. Ever tried to actually take them up on it? Or are you rich? SOB I've already got a credit card that never gets used to even a quarter of it's limit.  Why would I need another?

Heh @ ignoring my point. Because if you had tried to get one they may not have given it to you.

SOB

Sir Spot of Borg wrote on May 29^th, 2012 at 2:24pm:

... wrote on May 29th, 2012 at 2:19pm: Sir Spot of Borg wrote on May 29th, 2012 at 2:11pm: ... wrote on May 29th, 2012 at 1:57pm: Peter Freedman wrote on May 29th, 2012 at 1:49pm: Well, jolly good, I'm delighted for you. Well you're easily pleased.  I just throw them straight in the bin.  Obviously they're not as tight with credit as some people claim. Heh. Lucky you. Ever tried to actually take them up on it? Or are you rich? SOB I've already got a credit card that never gets used to even a quarter of it's limit.  Why would I need another? Heh @ ignoring my point. Because if you had tried to get one they may not have given it to you. SOB

Nothing to ignore, because there is no point.  When they say I'm "pre-approved" for this card, and all I need to do is complete the form, it suggests they're not just going to change their mind and say "ha just joking".

Please don't take this as defending banks, but they just can't win with you lot.  They loosen their lending practices, leading to the GFC.  They tighten them back up slightly as a result, and you complain they won't give anybody any credit!

CREDIT card providers are reaping in an extra $30.4 million a month by failing to pass on rate cuts to cardholders.    :o   

Despite the Reserve Bank of Australia slashing rates by 1 per cent since November last year, the average credit card rate has not been reduced and instead has increased by 0.01 per cent.

Latest research from comparison website mozo.com.au shows banks have margins five times higher on credit cards than home loans, with the gap between the cash rate (3.75 per cent) and average credit card rate (17.4 per cent) now a record 13.65 per cent.   :(

Mozo spokeswoman Kirsty Lamont says credit card customers are being hit hardest by being denied rate cuts.

"Credit card customers are basically being gouged by the banks who are desperate to find profits in a climate of falling mortgage borrowing and increased competition for deposits," she says.

"The banks control about 70 per cent of the cards market and their margins are the fattest that we've seen. They're about six or seven times fatter than the home loans margins.

"You don't see Wayne Swan bashing the banks for high credit card rates."

Lamont says a credit card holder with a balance of $5000 would save $50 a month if providers passed on the RBA's 1 per cent rate cut.

National Australia Bank was the only one of the big four banks that passed on a 0.25 per cent interest rate cut.

HSBC Australia's head of credit cards and retail alliances David Walker says a tough economic climate has made it difficult for card providers to cut interest rates.   :(

"We can't really compare interest rates on credit cards with home loans," he says.

"We are seeing higher delinquencies and we're feeling the pressure out there that's happening in the economy.   :(

"We are always monitoring it but at the moment we haven't made a decision to pass on any credit interest rates."

Walker says consumers need to make tough decisions to reduce their debts on plastic.

"People should make all endeavours to reduce their outstanding credit card debt," he says.    ;)

Read more: http://www.news.com.au/money/banking/avoid-the-plunder-on-your-plastic/story-e6frfmcr-1226368617341#ixzz1wEOAGEZ8

The bank keeps asking me if I want to increase the limit on my card....

Frances wrote on May 29^th, 2012 at 3:05pm:

The bank keeps asking me if I want to increase the limit on my card....

yeah they do that to me too but one time i asked if i could and they didnt let me.,

SOB

Frances wrote on May 29^th, 2012 at 3:05pm:

The bank keeps asking me if I want to increase the limit on my card....

That's about to change.

"From July 1, only customers who have ''opted in'' by giving their bank written or phoned consent will continue to receive such invitations."

http://www.theage.com.au/business/banks-rush-to-raise-credit-card-limits-ahead-of-tougher-solicitation-rules-20111231-1pg92.html

Sir Spot of Borg wrote on May 29^th, 2012 at 3:08pm:

yeah they do that to me too but one time i asked if i could and they didnt let me

A couple of months ago I paid for my mother's funeral using my card, without realising I already had a few charges on it, and managed to go about $40 over the limit.  I contacted them later, when I got my statement and was told something along the lines of "that's OK, we just extended your credit limit to cover it, is that all right with you?"  The bank just honoured the payment and put up my limit by, I think, $1,500.

Frances wrote on May 29^th, 2012 at 3:17pm:

Sir Spot of Borg wrote on May 29th, 2012 at 3:08pm: yeah they do that to me too but one time i asked if i could and they didnt let me A couple of months ago I paid for my mother's funeral using my card, without realising I already had a few charges on it, and managed to go about $40 over the limit.  I contacted them later, when I got my statement and was told something along the lines of "that's OK, we just extended your credit limit to cover it, is that all right with you?"  The bank just honoured the payment and put up my limit by, I think, $1,500.

Nice. Actually I have an overdraft apparently. Dunno how big it is. When they put a stop on my credit card a couple weeks ago for no reason I had to use eftpos. I didnt have enough money in there to cover it but it went through anyway. When I got home I looked in the internet banking and discovered I was about $120 over. I mean -$120 in my savings account! Gawd nose what the fees are going to be for that one!

Meanwhile I rang and asked why my credit card didnt work when there was like $5k on it and they didnt have an explanation and unblocked it. What a hassle.

SOB

Frances wrote on May 29^th, 2012 at 3:05pm:

The bank keeps asking me if I want to increase the limit on my card....

I get those nuisance letters all the time.
I only want a small limit credit card as they charge 20% interest
+ fees - what a rip-off.

Bobby. wrote on May 30^th, 2012 at 12:57pm:

Frances wrote on May 29th, 2012 at 3:05pm: The bank keeps asking me if I want to increase the limit on my card.... I get those nuisance letters all the time. I only want a small limit credit card as they charge 20% interest + fees - what a rip-off.

You guys do know that they can't increase your limit against your wishes right???

Andrei.Hicks wrote on May 30^th, 2012 at 1:11pm:

Bobby. wrote on May 30th, 2012 at 12:57pm: Frances wrote on May 29th, 2012 at 3:05pm: The bank keeps asking me if I want to increase the limit on my card.... I get those nuisance letters all the time. I only want a small limit credit card as they charge 20% interest + fees - what a rip-off. You guys do know that they can't increase your limit against your wishes right???

Of course I know that.
That is why they send  letters asking permission all the time.

wrote on May 29^th, 2012 at 1:22pm:

I suppose the individual person, and the governments, along with the Australian tax payer.   :(

you can only blame the government so far. Too many people live or more correctly attempt to live beyond their means.  Sometimes we have to tighten our belts. How many people asking for help, still have foxtel and the internet, the first things that could be cut from the budget.

Deborahmac09 wrote on May 30^th, 2012 at 2:21pm:

wrote on May 29th, 2012 at 1:22pm: I suppose the individual person, and the governments, along with the Australian tax payer.   :( you can only blame the government so far. Too many people live or more correctly attempt to live beyond their means.  Sometimes we have to tighten our belts. How many people asking for help, still have foxtel and the internet, the first things that could be cut from the budget.

Not sure about the internet but certainly Foxtel, beer smokes, fast food etc.