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What you can expect from the credit card reforms

From credit limit increases to card cancellations, here’s what will change with the credit card reforms in 2018 and 2019.

How you manage your credit card account and credit limits are about to get easier. The Australian government is rolling out four credit card reforms which are designed to protect cardholders over the next financial year. Kicking off with a ban on credit limit increase invitations from banks on 1 July 2018, these will impact how cardholders can cancel their cards, change their credit limits and are charged interest.

To help you understand how these credit card reforms will impact you and when they’ll apply, check out the table below.

ReformDetailsDate
Ban on credit card limit increase invitationsCard card issuers can not contact customers to offer credit limit increase invitations. This includes all forms of communication (including email, phone and in-branch). This applies even if customers have previously provided consent to receive these invitations.1 July 2018
Credit card limit assessmentsIf you’re requesting a credit limit increase, the card issuer must assess your request based on your ability to repay the debt within a certain period by ASIC.1 January 2019
Online card cancellationsCredit issuers must give customers the option to cancel their accounts or reduce their credit limits online. When a customer makes a request, the credit issuer must take reasonable steps to help the customer meet their request. This means that card issuers can no longer offer contrary suggestions when you’re trying to close your account or reduce your credit limit.1 January 2019
Ban on back-dated interest chargesBanks and credit card providers can not retroactively charge interest on credit card balances.1 January 2019

These reforms amend the National Consumer Credit Protection Act 2009 and are designed to protect cardholders from predatory and irresponsible lending.

Previously, the 2012 credit card reforms stopped card issuers from making unsolicited credit card limit increase invites. So cardholders had to opt to receive credit limit invitations either at the time of applying for the card or by contacting their bank directly. Opting out of these invitations didn’t stop banks from contacting cardholders electronically or over the phone.

However from 1 July 2018, credit issuers can no longer invite cardholders to increase their limit over any form of communication and the consent exemption has been removed. If you have assessed your finances and decided you do need to increase your credit limit, you’ll need to contact your bank to do so. You can check out our guide to increasing your credit limit for the steps you’ll need to take.

Picture: Shutterstock

Sally McMullen

Sally McMullen is an editor at finder.com.au who is a credit cards, frequent flyer and travel money expert by day and music maven by night.

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