Christmas heralds rise in card fraud

By Tim Blue

CREDIT cards are more than ever set to trumpet the title of "fantastic plastic" this Christmas on predictions of a sharp increase in usage and a parallel rise in card fraud.

Spending on cards will rise by close to 25 per cent over Christmas to top the $17 billion mark for the first time, according to research house Cannex.

The sheer scale of usage could generate headaches on repayments and increase the risk of theft or fraud, simply from greater exposure.

Members Equity Bank said yesterday it was encouraging members to be extra cautious when using cards.

MEB head of workplace business Tony Beck said: "Criminals are getting smarter and the incidence of fraud is increasing."

Cannex said the country's 13.1 million-plus credit cards will each swipe about $1280.

Encouraging the use of plastic are discount deals to win debt transfers from competing cards.

In the past six months, Cannex has found eight more cards offering to transfer balances at zero interest on existing debt, making a total of 15 to do so.

A "whopping" 73 more cards offer balance transfers at an interest rate on debt of less than 5 per cent, or better than half the usual rate. A total of 106 cards will offer such a rate.

Cannex reported that "lenders are lining up with their fishing nets ready to catch customers who have maxed-out over the festive season and are searching for an escape route".

To make spending easier, 21 cards were offering an interest rate of less than 10 per cent and 54 had rates under 13 per cent - eight of which did not charge an annual fee; a total of 28 cards were not charging an annual fee.

Cannex research analyst Garfield Wright said people spent up to 25 per cent more in December than they did for the other 11 months of the year.

"For the past three years, Australia's annual pattern of credit card usage has been predictable, with spending soaring in December as credit cards are well and truly given a workout," Mr Wright said.

January, however, was a different story as consumers came to terms with the credit card debt that needed to be paid off.

"There will be a completely different kind of New Year's resolution made this January."

The Australian Bankers Association reminded consumers yesterday that any debt on a card needed to be repaid.

But it said most borrowers did so, pointing to Reserve Bank of Australia figures for the past three Christmas periods that showed borrowers repaid 99.6 per cent of their debt over December and January.

Last Christmas was a good one, with RBA figures showing credit card holders made repayments that exceeded transactions by $638 million.