Credit cards.

Interest rates are falling fast as Reserve banks the world over try and head off the looming financial meltdown. Good news for those with a mortgage - but offering no relief for those heavily indebted to the banks through their credit card regimes.

It all started in Australia back in 1974 when Bankcard was introduced. The banks aggressively mailed out this new credit card to customers and the ubiquitous " Bankcard Welcome " appeared alongside merchant's cash registers.

People who had never experienced credit beyond a local store card suddenly found themselves targeted with their credit limit repeatedly increased and minimum repayments deceptively alluring. In most cases no interest was charged if the card was fully paid within thirty days.

It went downhill from there. Credit cards could be used overseas and could fund holidays. Interest rates crept up - and then the banks moved in for the killing.
Suddenly a plethora of extra charges applied. Pay a day late and cop a hefty fee. Administration fees and number of transaction fees vastly increased bank profits - and made credit cards a losing proposition for many.

The subtle marketing plan the banks used was the scattergun approach. Credit worthiness was not an option. The banks dished out credit cards and raised credit limits with reckless gay abandon.

Young people with little commercial experience fell into the trap and became hopelessly over committed - and many faced bankruptcy. Credit cards became the avenue of last resort for those facing financial ruin because of market changes - and the banks couldn't have cared less !

They maintained impossible credit charges to compensate for taking no action to limit these cards to people with responsible credit histories. Just about anyone could get a credit card and rack up debt. Those that didn't pay were written off - and subsidised by those who did pay.

Now the day of reckoning is approaching. The government is demanding that the banks adjust their credit card rates in tandem with mortgage rate decreases - and the banks are baulking.

It all depends on the will of the government. If the Treasury applies enough pressure the banks will have to fall into line and we will see a new era of credit management.

Getting a credit card will become very similar to the procedure for getting an overdraft in years past. A good credit record will again become a badge of honour, necessary when entering into any new financial transaction.

It seems to be a test of wills - and on a world view the situation is not encouraging. So far the banks seem to be standing firm - and credit card charges remain high in all countries of the western world.

All it needs is a little bit of firm resolve !