Credit - in Australia !

Seventy years ago, buying something in Australia required cash money up front in most cases.  The exceptions were wealthier citizens who were granted a charge account at local stores.  For the milieu it was the custom to secure wanted goods by a process known as " lay-by ".  The customer paid a small deposit and the shopkeeper put the goods into storage until the full asking price was paid in instalments.

About that time acquiring more expensive items such as refrigerators and washing machines  involved what was known as " hire purchase ".  Finance companies entered into agreements whereby the goods were installed in the customers home and paid for by regular monthly instalments.  Should the customer fail to pay on time, equity was regained by the finance company when the goods were repossessed.

The arrival of television in Australia in 1956 delivered the frightening prospect of a huge surge in credit.  To view television required the purchase of a television set and the government decided to stage the release to spread those purchases over a longer period.  Consequently there was a one year gap between the arrival of television viewing in state capital cities - and its commencement in the rest of the country.

Exposure to the use of credit cards arrived for the masses in 1974 when the Australian banks began issuing what they termed " Bankcard ".  Unsolicited cards were mailed to customers with credit limits arbitrarily imposed and for the first time many Australians found that the world of finance had arrived on their doorstep.  Bankcard was only applicable to Australian purchases and soon the big international credit companies were vying for business here and the era of holidays to world destinations began.

Credit has expanded exponentially from those times.  The big discount houses are offering a strange arrangement when goods purchased are on the basis of a long credit holiday.   No repayments are required for several years, but this can become a money trap if the interest applicable then rises to a higher level.  Many people find themselves over committed on credit and we now find a new form of credit arrangement called " Pay Day loans " offering cash loans at extortionate rates of interest.  Many people in financial distress are turning to this arrangement as a last resort.

Now this world of finance has moved up another notch, prompting a warning from the Foundation for Alcohol Research and Education ( FARE ).   Two new finance companies are specifically targeting customers to receive alcohol on the basis of extended time payment.   There is a risk that this will increase alcohol and credit dependency among vulnerable customers.

FARE is concerned that a " buy now - pay later " application to alcohol sales will be abused by both alcoholics and young people on the party scene.  Alcohol is an addictive product and if temptation is provided by the enticement of lower prices by buying in bulk the outcome can only be detrimental nationally.

The regulations that govern credit are in the hands of the government. It seems essential that limits apply to maintain a degree of control.  Unlimited credit is a monster that could devour the financial stability of many families.