Gillard to rein in credit cards -  August 15,  2010

Prime Minister Julia Gillard said she would also put the power to nominate a credit limit back in the hands of the consumer by stopping banks from offering an upper limit on each application.

Ms Gillard said many Australians had escalating credit card debt because every extension was accepted.

"One hundred and fifty thousand Australians get a new credit card every month, how amazing is that? Amazing," Ms Gillard said.

"So many Australians are reliant on credit cards, have credit cards, get new credit cards."

Under the policy the Labor Party will make it illegal for banks to offer regular credit limit increases unless consumers opt to receive it as a service.

Credit card statements will have to include a section on how long it will take to pay off the credit card if the holder only makes the minimum payment and how much interest would be paid over that time.

"It's truth, transparency but also more choice. So people aren't feeling that big credit card limits are forced on them," Ms Gillard said. "A lot of people have stories about being weighed under by credit card debt."

While credit card balances had been dropping since the global financial crisis struck in 2008, they began increasing again earlier this year and are currently at a record high of about $44 billion, RBA figures show.

In June this year Australians held more than 13 million credit cards with a combined credit limit of about $122 billion, according to the Reserve Bank of Australia.

If elected Ms Gillard said she would consult with financial institutions and consumer groups on the reforms.

She said giving people control and information over their credit card debt was important.

"So people couldn't get into escalating credit card debt because every extension has just been accepted," she said.

"We'd give people more ability to set their own credit card limits, so that there's a trigger point and they couldn't go over it."