Needy hit by Christmas credit card crisis

The
Catholic Weekly
Online

Sydney
8 February 2004

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Needy hit by Christmas credit card crisis

By Damir Govorcin

Overuse of credit cards at Christmas is sending low to middle income families to the wall.

Statistics from the St Vincent de Paul Society show that many low to middle income families have three to four credit cards, amassing debts of more than $8000 over the Christmas period.

At the extreme end, one man sought help and counselling from Vinnies after he went out of control, accumulating 14 credit cards and racking up a debt of $28,000.

He had spent the money on toys for his family and relatives and treated himself to an expensive overseas holiday.

He has since filed for bankruptcy.

February is when families start to feel the post-Christmas financial pinch.

The school holidays are over and the bills start coming in.

But there is no money to pay them.

As a result, parents can be filled with a sense of shame and guilt and lose all self-respect.

Vinnies’ budget counsellors each see more than 600 people a year who have racked up a Christmas debt.

Since 1996, budget counsellor Sheila Kinsella has helped hundreds of families on the edge of financial ruin.

She says the lack of money and the pressure to give their children what they want at Christmas pushes families beyond their financial limits.

“Christmas brings out a lot of tension in families with no money, and problems such as domestic violence increase, which adds to the situation,” she says.

“Disadvantaged families on low income or Centrelink payments hate the thought that their children won’t get the presents they want, so they spend what they can’t afford.

“They not only over spend on credit cards, but they also get money off loan sharks who charge 45 per cent interest.

“As a result, they can’t meet the hefty repayments and find themselves in a financial mess.”

Mrs Kinsella’s job is to negotiate with bank creditors, loan sharks and debt collectors to buy families some time.

“Sometimes the debt collectors are very good,” she said. “Other times you have to do a lot of talking and convincing.

“Eventually, these debt collectors know they will get their money back, but it may take a couple of years.

“We work with people to get their dignity back and help rebuild their self-confidence.

“We show them there’s light at the end of the tunnel.”