Unlimited Personal Debt !

 We have just experienced a massive flood that ravaged the east coast of Australia  and a lot of the damage was not covered by insurance.  Even a relatively low level of muddy water penetrating the average home can damage electricals such as refrigerators and freezers, bedding and carpets and after the water subsides much of the contents ends up on the local council tip.

The average daily newspaper has been reducing in size and increasing in cost.  Fewer people are buying newspapers and the news industry is struggling to survive, but there has been an outstanding change in the type of advertising that fills newspaper pages.

The big discount stores are filling many pages with offers that extend long term credit.  It is not unusual for goods to be offered with a thousand days payment holiday and to further induce buyers, the customer is rewarded with a company gift card directly related to the value of the debt undertaken.

These discount houses compete with one another by the nature of extended credit offered.  Their message is " buy now " and no deposit is required and you get no interest charged for a period of sixty months.  This is a money trap because few bother to read the small print that tells them what happens when that credit limit expires and the debt remains unpaid.

The question such customers need to ask themselves is:  "  If you can not afford to pay for that item now, why do you believe you will be able to pay in five years time  ?   "

It is not only the big discount houses using this sales ploy,  finance groups that specifically extend similar credit to the smaller shops are shooting up the leaders board on the stock exchange.   The interest the banks pay on term deposits has attracted self funding retired people to take a gamble on the stock exchange in what they see as profitable enterprises.

The government is becoming concerned at the growing consumer debt and it seems stuck between a rock and a hard place.   That unusual rain event was triggered by global warming and it destroyed many items that most people consider housing essentials.  Replacement by buying for cash is out if the question for many households and these extended credit offers seem the only solution.

When television arrived in Australia in 1956 the government worried that the buying of television receivers would overburden household finances and restricted transmission to capital cities for the first twelve month period. It then moved to provincial cities and country areas followed.

Perhaps similar limits need to apply to extended credit.  It can be justified in flood areas where households have a genuine need to replace water damaged essentials but much of the sales traffic is occurring in city areas where sheer greed prevails.

These unlimited credit offers are only leading the unaware into future financial difficulties  !