Banks grooming kids for credit
The head of a parliamentary committee investigating credit card fees fears Australian children are being groomed by banks hoping to cash in on their spending later in life.
Labor’s Sam Dastyari says while children should have bank accounts, they should not be taught about finances by banking institutions.
The senator said his committee has been shown evidence that banks are sending credit card offers to people as soon as they turn 18.
Times had changed from the days when government-run financial institutions taught children about saving with initiatives like Dollarmite accounts.
“We live in a world of data, and now you’re having data that is being developed from kids as young as five that go into databases that allow them to build profiles,” Senator Dastyari told ABC radio on Friday.
He wants financial literacy to be taught by educators and regulators such as the government-funded Australia Securities and Investments Commission.
The Senate economics references committee has been looking into what the senator believes are “record high” credit card fees and how to put downward pressure on those charges.
“The gap between (the cash rate) and what it actually costs to pay interest is now at a record level,” he said.
Senator Dastyari believes there are several potential solutions, including lowering barriers to transfer credit cards between institutions.
Australians should have more control over their card numbers in the same way telecommunications companies allow customers to carry their phone numbers across providers, he said.
Changing credit cards was not as easy as it should be, Senator Dastyari said.
“You’re more likely to leave your partner than your bank.”
The committee is also looking at whether it’s possible to limit the amount of profit banks can make from money-lending debt.