The wolves of Collins St: Students crippled by credit card debt

Students in rocky financial situations have found they are still being offered credit cards.

By EDWARD WONG

University students have revealed they are not immune from the pressure banks have put on customers to take on excess debt, as details of exploitative practices by financial institutions continue to be revealed in the Banking Royal Commission.

Banks’ willingness to increase credit card limits and give loans to customers who are likely to struggle to repay their debts are among potential issues being investigated by the commission. 

RMIT accounting student Vincent* said he had been gambling for three years.

Despite having built up over $10,000 in credit card debt with a major bank, he still found it easy to extend his credit limit.

Vincent said easy access to additional credit saved him the shame of having to ask friends and family to fund his gambling addiction.

“I find it can be embarrassing to always ask friends or family to borrow money,” Vincent said.

“When you’re so deep in the red, it only makes sense to borrow more to win enough to pay it all back in one go.”

Vincent said the Commonwealth Bank’s constant advertising had made it hard to resist increasing his credit card limit.

“It’s hard when you keep receiving all these emails that make it seem so easy,” he said.

Former blackjack dealer Tony Che. Source: Facebook

Former Crown Casino blackjack dealer Tony Che, a friend of Vincent, said it looked like the bank had exploited Vincent’s addiction.

“If you’d only look at his credit card transaction history, it’s blatantly obvious that Vincent had a gambling problem,” Mr Che said.

“It’s terribly irresponsible of the banks to offer additional credit to someone who clearly can’t pay it back.”

Mr Che said, from his time working in the gambling industry, he knew he knew many people who regretted extending their credit limits and wished the banks had turned them away.

“These wolves only care about maximising profits,” he said.

“It’s quite sickening to think that if banks have such extensive credit checks before you apply for a home loan, then how could they then offer such easy access to credit?”

Deakin Arts student Jonathan*, 21, said he had been targeted with credit card limit extension ads from a major bank despite already having a poor credit rating.

“You start with some credit for drinks, then some clothes and maybe even a new watch. Before you can even think of stopping, the ads fill up your inbox again,” Jonathan said.

When asked whether he felt NAB’s marketing strategies played a role in influencing his compulsive spending, Jonathan laughed the question off.

“Our parents all have mortgages. We live in a credit-driven world. I don’t see what the fuss is all about,” he said.

The banking royal commission now under way has heard from a number of bank customers who were encouraged to increase their credit limits, even when the bank knew it was for gambling.

Bank customer David Harris gives evidence at the banking royal commission. Picture: ABC

Commonwealth Bank customer David Harris  told the commission  the bank regularly offered him increases on his credit card limit, even after they knew he was using it to gamble.  He said he was still struggling to pay off the debt he accrued.

“The bank proceeded to say that I was eligible for another credit limit increase to which I replied no, and they carried on asking what – what do I want to do with it. So I explained that clearly, I’m a gambler, I have a gambling problem,” he said.

“I can’t understand why they keep offering me more money,” he said.

Monash Banking and Finance Professor Michael Skully. Source: LinkedIn

Monash University Banking & Finance Professor Michael Skully said both the banks and credit card debt victims should take some blame.

“The commission will give a view on misconduct. It would seem we can find many examples, but whether it is systemic is another matter. One hopes not,” he said.

“The Australian banks can’t be blamed for trying to make a profit, but there certainly seems instances in which they have not followed good lending practice.”

However, some students said they had taken advantage of their bank’s aggressive credit lending practices to strengthen their credit rating.

University of Melbourne Juris Doctor Candidate Kit Mun Lee. Source: LinkedIn

University of Melbourne Juris Doctor candidate Kit Mun Lee said he has maintained a healthy credit rating by never spending money he could not access.

“I don’t spend much. And when I do, I only spend money that I have,” he said.

Monash University Arts graduate Jacqui Horvat said immediately paying off her credit card debt had helped her boost her credit rating.

“Proving that I can maintain a healthy credit rating from such a young age will help me to apply for a home loan in the future,” Ms Horvat said.

“I pay off my credit card debts weekly and maintain a zero balance, and I try not to allow my credit card debt to go beyond a week or two.”

The four major banks declined to comment regarding the royal commission.

* Did not wish to reveal their full name.