# Should we be worried about the credit card debt clock?



## Tyler Durden (4 March 2012)

I remember seeing a US debt clock page, but now we have a credit card debt clock for Australians here:

https://www.moneysmart.gov.au/borrowing-and-credit/credit-cards/credit-card-debt-clock

According to that, Australians with credit cards owe $36b in total, which means an average debt of $4,700 per credit card holder, paying $800 in interest per year.

Should we be worried? What happens if everyone defaulted on their credit cards? I mean, it's kinda different to mortgages because it's an unsecured debt, so would the consequences be serious?

Also, I am not sure how 'accurate' the painted picture is - does that mean people have a net wealth of -$4,700, or just that they have a debt of $4,700 but could have other assets worth more than enough to cover it?

Do you know anyone who thinks it's ok to just pay the minimum per month?


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## Eager (4 March 2012)

Tyler Durden said:


> I remember seeing a US debt clock page, but now we have a credit card debt clock for Australians here:
> 
> https://www.moneysmart.gov.au/borrowing-and-credit/credit-cards/credit-card-debt-clock
> 
> ...



We only use a credit card for convenience sometimes, and is generally paid off within the month. Haven't paid CC interest in years.

If people default on their debt, the Sherriff comes around and takes possession of goods. No problem!

But yes, credit for everyday stuff is too easy to secure, and the interest rate should be about 50% after 1 month I reckon.


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## Glen48 (4 March 2012)

Many would use it to pay their credit card bill for the month.
 Watch it increase


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## McLovin (5 March 2012)

Tyler Durden said:


> Should we be worried? What happens if everyone defaulted on their credit cards? I mean, it's kinda different to mortgages because it's an unsecured debt, so would the consequences be serious?




An unsecured loan means creditors don't have a charge over specific assets. It doesn't mean they don't have recourse to the borrowers assets through the courts if they fail to pay.


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## Starcraftmazter (5 March 2012)

36Bn is relatively small to the $800Bn or so mortgage debt we have - which is what everyone should really be worried about. Total household debt is well over 100% of our GDP too - the highest in the world, and that's a hell of a lot to worry about.

We have the highest debt to income ratio in the world.




Even though it hasn't grown since our housing bubble peaked - it hasn't really gone down much either (Ruddprime's FHOB didn't help!). 

The Australian consumer has a hell of a long way to de-leverage, and that poses all sorts of problems for the Australian economy.


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## sptrawler (5 March 2012)

Tyler Durden said:


> I remember seeing a US debt clock page, but now we have a credit card debt clock for Australians here:
> 
> https://www.moneysmart.gov.au/borrowing-and-credit/credit-cards/credit-card-debt-clock
> 
> ...




The credit card debt is getting payed down, that's what Jerry Harvey is complaining about.
The debt was nearly $50billion, less than 12months ago people are paying debt down quicker than ever before.
This is due to complete lack of consumer confidence, brought about by the fear of a terribly incompetent government.  

http://www.australianbankingfinance.com/banking/consumer-caution-continuing--mastercard


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## Starcraftmazter (5 March 2012)

sptrawler said:


> This is due to complete lack of consumer confidence, brought about by the fear of a terribly incompetent government.




So the highest private debt to GDP in the world caused by high leverage to overinflated property - at a time when property prices are going down has nothing to do with it?

The global economic crisis has nothing to do with it?

It's all the government is it?


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## Calliope (5 March 2012)

Starcraftmazter said:


> It's all the government is it?




But you're the guy who said;

"Anyone who trusts any government should probably be stripped of the power to vote."


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## hangseng (5 March 2012)

Eager said:


> If people default on their debt, the Sherriff comes around and takes possession of goods. No problem!




Unless they die and have no assets. I was amased to see just this event panning out with a relative. Only a few months to live and I have found a major CC debt that she has no chance of paying off. Bank can send all the sherrifs they want but there is no assets or cash to draw on.

Who is at fault? 

The person being an old lady with no idea what she is doing racking up the debt, treating it like cash in the bank and just paying the minimum payment from the pension? Or the bank for not checking who they give cards to in the first place and annually increasing limits like it was some form of gift?

In this case I lay blame squarely at the doorstep of the bank, irresponsible and complete lack of accoutability or checks in place. For the bank not a lot of money, but how many of these situations are there? I dare say quite a few that will simply have to be written off.

I have looked after this person for some time, paying out for unaffordable needs as they arose. But I never knew of this CC and was astounded when I saw how much was owing. I will continue to help here until the end but I won't be paying for the banks irresponsible ways, nor do I have to so the bank must write it off.

Do they make contingency for these situations? I am guessing they do and simply have it built into the exhorbitant interest rates and fees. If they haven't then another strike against the banks.


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## Glen48 (5 March 2012)

That's why they charge so much interest to cover these situations.
I would be worried the bank will sell her house to recover the debt not knowing the full circumstances might be time to sell up and move to a home????


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## McLovin (5 March 2012)

hangseng said:


> Unless they die and have no assets. I was amased to see just this event panning out with a relative. Only a few months to live and I have found a major CC debt that she has no chance of paying off. Bank can send all the sherrifs they want but there is no assets or cash to draw on.
> 
> Who is at fault?
> 
> ...




The bank makes more money from giving credit cards to all and sundry than by trying to enforce mortgage like lending standards. Hence the interest rate. From their perpective, it costs more to try and weed out potential bad debts than it does to just wear them as they occur. They ain't losing.


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## hangseng (6 March 2012)

Glen48 said:


> That's why they charge so much interest to cover these situations.
> I would be worried the bank will sell her house to recover the debt not knowing the full circumstances might be time to sell up and move to a home????




That was my point she has nothing, no cash or physical assets at all and the stupid bank gave her a credit card with a 20k limit, intially a 5k limit that just kept increasing at the banks will Now they have a debt or at least will shortly.


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## sptrawler (6 March 2012)

Starcraftmazter said:


> So the highest private debt to GDP in the world caused by high leverage to overinflated property - at a time when property prices are going down has nothing to do with it?
> 
> The global economic crisis has nothing to do with it?
> 
> It's all the government is it?




The highest private debt in the world and the gfc, didn't stop house prices continuing to rise in 2009 and early 2010.
Everything started to go pear shaped since the gillard minority government came in mid 2010. Have a look at the all ords against the dow, we are flat lining since these goons came in.
Also the house price slide started after the turmoil with labor started in 2010.
Your pretty good on the computer maybe you could throw up a couple of charts.


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## Trembling Hand (6 March 2012)

sptrawler said:


> Have a look at the all ords against the dow, we are flat lining since these goons came in.




With that logic the Gillard gov must also be responsible for holding down all the other Asian indexes as well?


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## Starcraftmazter (6 March 2012)

Calliope said:


> But you're the guy who said;
> 
> "Anyone who trusts any government should probably be stripped of the power to vote."




Yes, and that - just like your post, has nothing to do with what is being discussed in the thread 



sptrawler said:


> The highest private debt in the world and the gfc, didn't stop house prices continuing to rise in 2009 and early 2010.




Are you trolling? I'm just curious. Have you heard of this thing called the first home owners *boost*? That is why house prices rose again - not because Australians are super-confident, but because a lot of demand was brought forward and a lot of people suckered in with a lot of money.

This has nothing to do with the Gillard government.



sptrawler said:


> Everything started to go pear shaped since the gillard minority government came in mid 2010. Have a look at the all ords against the dow, we are flat lining since these goons came in.




Now I know you're trolling.



sptrawler said:


> Also the house price slide started after the turmoil with labor started in 2010.
> Your pretty good on the computer maybe you could throw up a couple of charts.




Err yeh sure - my favourite chart.




See where the prices start to go down in the GFC? That's the GFC.

See where they spike up again? That's the FHOB.

See where they resume falling again? That's because the effects of the FHOB have finished and we have the largest housing bubble *in the entire world* which is now collapsing.


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## sptrawler (6 March 2012)

Oh well SCM here is someone else who agrees with you.

http://australianpropertyforum.com/blog/entry/3206010/6114/


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## Starcraftmazter (6 March 2012)

sptrawler said:


> Oh well SCM here is someone else who agrees with you.
> 
> http://australianpropertyforum.com/blog/entry/3206010/6114/




Anyone who doesn't - and in particular anyone who thinks it's the government's fault has  some very very serious issues.

I sure hope their investment logic is better than their economics logic.


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## sptrawler (6 March 2012)

Starcraftmazter said:


> Anyone who doesn't - and in particular anyone who thinks it's the government's fault has  some very very serious issues.
> 
> I sure hope their investment logic is better than their economics logic.




No, I've just blown my dough on a property. Guess I'll just have to live to 100 to see a profit.LOL


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## Starcraftmazter (6 March 2012)

sptrawler said:


> No, I've just blown my dough on a property. Guess I'll just have to live to 100 to see a profit.LOL




Maybe if you are young.

The one good thing is, I feel very happy for the fortunate person or couple whom you bailed out by giving them market value for an asset which is experiencing significant capital loss and will continue to do so well into the future.

I'd like to think that they are smart and will rent from here on out.


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## Glen48 (6 March 2012)

Once they all start to panic and the prices tanks another FHOB or some taxpayer funded scam will be introduced to prop up the government.
 The smart ones are being hung out to dry  for being smart and saving  when they should be out pumping up the bubble.


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## sptrawler (6 March 2012)

Starcraftmazter said:


> Maybe if you are young.
> 
> The one good thing is, I feel very happy for the fortunate person or couple whom you bailed out by giving them market value for an asset which is experiencing significant capital loss and will continue to do so well into the future.
> 
> I'd like to think that they are smart and will rent from here on out.




I might have to get my pliers out and come out of retirement.


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## Starcraftmazter (7 March 2012)

Glen48 said:


> Once they all start to panic and the prices tanks another FHOB or some taxpayer funded scam will be introduced to prop up the government.
> The smart ones are being hung out to dry  for being smart and saving  when they should be out pumping up the bubble.




It's definitely possible. The issue is that there are only so many times that will work - and there is only so much demand that can be brought forward. There is also only so much debt the government can incur by continuously doing that.


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## damien275x (12 March 2012)

Pumping the bubble - that reminded me of that beat the bomb game they used to play on 101.1 .. I went on it once.. tick tick tick... $200.... $400... $500... $1000... $2000 *BANG* you just never know when it will go bang. You'd rather take your chips off the table and not play that game.


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## Tyler Durden (11 April 2012)

Relevant article:



> MOUNT DRUITT, Campbelltown and Liverpool have emerged as Sydney's bankruptcy hot spots as families succumb to mounting credit card debt and chronic unemployment.
> 
> The three suburbs topped a list compiled by the federal agency Insolvency and Trustee Service Australia, which revealed the NSW postcodes most vulnerable to bankruptcy last financial year.
> 
> ...




http://www.smh.com.au/money/mountin...y-boom-in-western-suburbs-20120410-1wn1f.html


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## Tyler Durden (4 April 2015)

Contrary to the point of the article, looks like it has gone down a bit from $36b when I first made this thread:



> Despite falling interest making it easier to pay down loans, Australian households now owe almost $1600 billion, a 28 per cent rise in just five years, and economists say our personal borrowing levels are among the highest in the world.
> 
> The latest Reserve Bank of Australia figures show housing debt is the biggest factor. Meanwhile, people are paying high interest rates ”” averaging 17 per cent ”” *on almost $33 billion of credit card debt that fails to get repaid every month.*





http://www.news.com.au/finance/mone...-billion-in-debt/story-e6frfmcr-1227289530147


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## skcots (4 April 2015)

Tyler Durden said:


> Contrary to the point of the article, looks like it has gone down a bit from $36b when I first made this




The original link indicates that we are currently $43 billion. I just had a look around and another estimate is $49 billion.

I guess it depends on where the data is coming from.


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## Mrmagoo (6 April 2015)

Tyler Durden said:


> I remember seeing a US debt clock page, but now we have a credit card debt clock for Australians here:
> 
> https://www.moneysmart.gov.au/borrowing-and-credit/credit-cards/credit-card-debt-clock
> 
> ...




I used to work on a customer service line at a bank and -4.7k with no savings seems oddly familiar.


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## Smurf1976 (6 April 2015)

Mrmagoo said:


> I used to work on a customer service line at a bank and -4.7k with no savings seems oddly familiar.




Some people must owe an awful lot given that there are others, like me, who pay the full outstanding balance each month and thus pay zero interest.


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## IFocus (6 April 2015)

Smurf1976 said:


> Some people must owe an awful lot given that there are others, like me, who pay the full outstanding balance each month and thus pay zero interest.




I just find it weird anyone would pay 17%, like you Smurf had a credit card for ever and move 99% of my transactions through it but never ever pay interest. Only linked it the other day to a saving account so i could get cash occasionally.


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## Tyler Durden (6 April 2015)

IFocus said:


> I just find it weird anyone would pay 17%, like you Smurf had a credit card for ever and move 99% of my transactions through it but never ever pay interest. Only linked it the other day to a saving account so i could get cash occasionally.




It's probably unbelievable to us who have some degree of financial literacy and have an interest in money, but there are lots of people out there who just don't care. I remember when I was growing up, my mum would buy things on her credit card, and once when I asked how we could afford to pay it back, her response was "don't worry, just worry about it when the time comes".


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## Tyler Durden (23 March 2016)

Tyler Durden said:


> I remember seeing a US debt clock page, but now we have a credit card debt clock for Australians here:
> 
> https://www.moneysmart.gov.au/borrowing-and-credit/credit-cards/credit-card-debt-clock
> 
> ...




Fast forward 4 years and the total owed by Australians has been reduced to $32b, giving an average debt of $4,300 per credit card holder, paying $735 in interest per year.

Looks like Australians are doing the financially savvy thing by paying off their credit cards.


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## sptrawler (23 March 2016)

Tyler Durden said:


> Fast forward 4 years and the total owed by Australians has been reduced to $32b, giving an average debt of $4,300 per credit card holder, paying $735 in interest per year.
> 
> Looks like Australians are doing the financially savvy thing by paying off their credit cards.




The good thing about credit card debt, it allows the want it now people to get it, also gives banks easy income to give out dividends.
Win win situation.
If the financially challenged, weren't spending the money on themselves, what would they be spending their money on?
I personally, would rather see them buying a $400 t.v on credit, than punching $400 through the pokies. Just my opinion.


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## sptrawler (23 March 2016)

This is the whole problem regarding debt, gambling, smoking, drug use, etc.

You can't legislate, to stop people doing, what they want to do.

All they will do is find another way to circumvent, the impost.

As with tobacco, just keep making it more expensive, until lifestyle choices must be made. Eventually everyone reaches a limit where they say "I can't afford this".
Some will turn to crime to support it, but they would anyway, the legal system has to deal with them.
To say credit card interest is too high is ridiculous, if people can't afford it, don't buy it.
Many generations, over many centuries, managed with that mantra.FFS


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## Wysiwyg (23 March 2016)

sptrawler said:


> This is the whole problem regarding debt, gambling, smoking, drug use, etc.
> 
> You can't legislate, to stop people doing, what they want to do.



That's right. People do what they want and that is fine unless their actions infringe on other people like passive smoking or king hits or crashing a vehicle on drugs or fix em up costs paid by taxes.


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## poverty (25 March 2016)

Credit Card debt is one of my favourite things.  Citibank will routinely send me cheques for 20K at 0% interest, they do this because they know my ING account is very safe and I will look after their 20k for them until the time comes to pay it back.


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## Knobby22 (25 March 2016)

Really? I am sure they have ulterior motives. If only a few of people getting the money blow it then the bank stands to gain greatly.


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## SmokeyGhost (25 March 2016)

I suppose in a broad sense credit card debt or overall personal debt may be an issue but, after quite sometime, I've concluded I can do absolutely zilch about the debt of others so now I only concern myself with managing my commitments to ensure I never over extend myself to the detriment of my family.

I have encountered a number of individuals who have got themselves into a little bit of strife with cc and other forms of debt and while saying in response "Not good.  Hope it works out for you," mentally I take the position "You're an adult, you made a choice, so deal with it."  Very mean of me and very indifferent to their plight I agree.


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## pixel (25 March 2016)

SmokeyGhost said:


> I suppose in a broad sense credit card debt or overall personal debt may be an issue but, after quite sometime, I've concluded I can do absolutely zilch about the debt of others so now I only concern myself with managing my commitments to ensure I never over extend myself to the detriment of my family.
> 
> I have encountered a number of individuals who have got themselves into a little bit of strife with cc and other forms of debt and while saying in response "Not good.  Hope it works out for you," mentally I take the position "You're an adult, you made a choice, so deal with it."  *Very mean of me and very indifferent to their plight I agree.*




"You can lead a horse to Uni,
but you cannot make him think."

IMHO there is a difference between "indifference to their plight" and recognition that you can't lead other people's lives for them. If a friend of your falls for the marketing jingle to "keep up with the Joneses" and outspend all neighbours no matter what, your lonely voice of reason will at best annoy them, most likely reduce the number of your friends by one.

Nobody wants to talk about the Elephant in the Room: Big Business and Big Government have been in bed at least since the "Recession We Had to Have". As a consequence, school curricula no longer focus on basic arithmetic that would enable young adults to figure the effects of cc interest and compound interest; even budget discipline has become an outmoded concept that only applies to fuddy-duddy fossils. Instead, kids are taught the importance of feeling good about themselves, looking appealing, and fitting in with their peers and role models - most of whom are making a comfortable living on American-led TV shows and flogging eye liners, fake tan, and stinkums. Each time a kid forks out for the "must-have" rubbish, the cash register rings the bell for the retail store, the government rakes in 10% GST, and the consumer ends up with a fake feel-good and a real debt. 
Result: win-win-lose.


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## SmokeyGhost (27 March 2016)

Yeah, you are likely to be right there, pixel.

Like many I assume, I have noticed the increase in advertising of these so-called debt consolidators and lenders offering quick, small loans.  More debt trouble ahead I think but I just shrug my shoulders and if individuals sink, then they sink.  As long as it's not me.


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