Reckless Lending (Possibly)

Hi, i moved to Aus a few years back and wanted to get a credit card but had no luck. Had to wait for 3 months to get one due to being new. A buddy recently moved here and got like a 40k credit card from NAB approved with a salary of about 85k. This was without even starting to work, just his job offer. He ended up in a tight spot and trying to neg. With NAB on the repayments but asked me today if this wasn't reckless of them to start off with. Think he is just trying to get something to hit them back with in order to make payments.

According to my to knowledge once you sign the dotted line it doesn't matter if they gave him a 500k credit card. He is responsible correct?

Edit:

Ok so after some comments and a bit of lack of information from my side I decided to add this edit here and at a post more down. Firstly, when I say recently, it has been around 2 years I think. He came over with a job offer but he didn't start to work. He manages to get a credit card from NAB WITHOUT telling some fake story about his income. He's married with a kid and as far as I know, Aus has something to determine a minimum required expense based on if you are married and have kids, etc. I can't remember what this is called. He provided accurate information with the offer of employment. Based on this he got a massive credit card. He didn't use ALL of it and he didn't spend it on luxury items. These were essential things to set up a basic house.

He since got into a bit of financial trouble thanks to Covid where he had to take less money home and he's just trying to get NAB to assist with a lower payment until he finds other employment. He doesn't want to take the rest of the money and pay the card with that and putting him in more debt. He understands that he used the money and is more than happy to pay back everything, he just wants a lower payment for a few months to hopefully get everything back to what it should be. I never stated he wants the amount written off. Some argued that he had to lie on the application to get that amount of money available on a credit card, this is the point. He didn't (yes he accepted it, why I don't know but he did) but why did they provide it in the first place on that salary? I earn a fair bit more and I highly doubt the bank will even provide me with a credit card of that amount lol.

To sum up the questions I would like to be able to provide him with some useful information (some have mentioned a few things and thanks for that) on what he can try and do. The other question was more for me as to why I had to work for 3 months and provide payslips where he manage to arrive in Aus and just provide an employment offer and got approved. There were no previous payslips he could have provided and even no current payslips. I struggled to buy a car in the first 2 months and had to take a bad interest rate just to get approved and he got a 40k credit card.. This just feels weird.

There are a few guys who mentioned some idiotic comments and statements like he's a moron etc. Some of you might have said something due to the lack of info from my side. Some might just be pure privileges [email protected] who would never understand anything more than having your parents as a backup. Many of "us" have to take the hard road. For me, my wife, and 2 kids this was the case. We used about all our life savings to get the visas sorted for PR, flights, rental deposits, moving half of our furniture over to Aus etc. This is a hard part but also the easier part. Imagine (if you even can) having to leave EVERYTHING you know behind, all your friends, your family coming to a country to try and give your children a better future. Just learning what you call certain things, the mental challenge is to remember to work in AUD and not just buy stuff because it might sound cheap. It is a big challenge

I hope I cleared up any confusion and I didn't want to start an argument or debate on anything or even have people give their opinion about shifting blame and he doesn't want to pay. I, still being new as well, just tried to find out what options the guy has and not advise him on something I know from my old country.

Comments

  • +49

    Change the thread title to "Reckless Spending (Definitely)"

    Spending almost 50% of an annual salary on a credit card and then having trouble paying back the balance, let alone any interest, is the very definition of reckless.

    Are you saying your friend plans to tell NAB "hey fam, I recklessly spent tens of thousands on the card because you recklessly gave me a cray cray limit"? Really?

    Tell him/her to study this - https://www.nab.com.au/help-support/financial-hardship/credi...

    • +1

      At the same time, it's reckless and high risk for NAB to lend someone without a way to pay back such a high credit card.

      There are some laws in place to protect consumers from themselves, because people can be very reckless

      • +9

        At that limit with no job I actually wonder if he was honest on his application.

        • yep which would likely help the bank get off (that said they're very cautious these days around these things).

        • +1

          And what about having to present his previous 2 pay slips? Are we not being told some BS here? Banks don’t just hand out 40k c/cards without some due diligence

        • Obviously this is pre-Royal Commission, but around 10 years ago when I was working a casual job at university (~$30,000/year) and I was in a tight financial position I decided to apply for a credit card. Applied with all my legitimate details and was honest about my earnings. I was offered a card with a limit of $15,000.

          It's certainly not beyond the realm of possibility for banks to offer that kind of money. Again though, this was pre-Royal Commission so banks should have had these kinds of things tightened up.

          • @CBrads4: Well that is 30k a year more than his friend was earnings and it sounds like the application was relatively recent if in last few years.

      • +2

        It's so reckless that you have to think it likely that the applicant told a porky or two on the application.They don't do a lot of verification for these things.

  • +18

    Some people need to take responsibility for there own actions.

    I'm all for banks giving the 18 year Olds a small CC which they will smoke up in no time and learn it's not free money.

    But a grown ass adult should know better. He would of had the option to say nahhhh 10k will do me.

    • +1

      Agree. 20 years ago I had a $250 credit card at 18 and it was the best way to learn. $250 wasn’t much but the lesson was worth it.

      • +3

        $250 credit card, luxury

        I had a key card and a dollarmites cheque book back in my day

  • +18

    There is no irresponsible lending, only irresponsible borrowing.

    The onus is 100% on the indivdual to determine whether the product is right for them.

    • I'm sure we were taught all about responsible money management in the 12 years of schooling we got…..?

      Or was the time spent on more practical life skills like gender fluidity studies and critical race theory?

      • You can learn unimportant stuff like maths and science and money management anywhere. But school gives those who believe in things like gender fluidity and critical race theory the opportunity to close the door, lock the children in, and indoctrinate them, and to punish them if they don't believe in the right things, so they have to give priority to them.

        • +3

          Indeed, but after leaving school I know what information and skills I'd prefer to have. (Having learned the hard way over many years…)

          • @EightImmortals: If they taught this do you actually think anyone would listen in school?

          • +3

            @EightImmortals: School teaches basic transferable skills like personal accountability, responsibility, organisation etc. Students wouldn't graduate until they're 20 if they had to be spoonfed every little obvious thing.

            Also, being taught in school doesn't mean they'll actually listen and apply it in life. Many things can influence behaviour ie. Peer pressure, culture etc

            • @Ughhh: I wish schools focused more on critical thinking instead of regurgitating tweaked essays.

    • +8

      Interest calculations and taxes are taught in maths. Dunno why every bogan who fails their way through schools complains and says they wish they had been taught useful things, like tax, in school.

      Even just by learning how to calc percentages properly in grade 8, you will be able to figure out taxes pretty quickly….or take accounting/business in senior.

  • +9

    Yes it is reckless lending, but if your buddy knows enough to call out the bank for reckless lending it sounds like he knew what he was doing.

    Your buddy should speak to a financial counsellor, a not for profit one (there’s some private debt consolidation companies that are a rip off) https://moneysmart.gov.au/managing-debt/financial-counsellin...
    They should be able to assist with negotiating with the bank to pay down the debt.

    • I doubt full info is shared here. Maybe OP’s friend did show healthy income from previous employment elsewhere. Some assets as well? He may be new to AU but with lots of experience elsewhere. Else it doesn’t make sense to issue credit card. Let alone $40k limit. If it indeed happened, this is irresponsible from NAB.

      Not to mention, the onus is on OP’s friend to use responsibly and payback amount.

  • +14

    Your mate is one of the faceless heroes that are helping the economy

  • +12

    Given how absurd the Responsible Lending regulations & voluntary codes are at the moment… yeah, nah. Right now, the government has started rolling back the regulations to make it easier for people to get finance.

    Your friend either lied about their living expenses, or is a some sort of irresponsible man-child… either way, neither is the bank's responsibility. What would you have them do - require an interview with a psychologist before issuing a credit card?

    • +6

      People went to the Royal Commission and made out the banks were responsible for whatever had turned out badly in their financial lives. If you exaggerated your income and couldn't make the payment on the amount you borrowed, the bank was responsible for not checking better. If a farmer borrowed to the hilt in a good year, spent it on expanding his business, then there was a long drought, and he couldn't make repayments, it was the banks fault. Pretty much everyone realised pretty quickly after the recommendations became law that they were actually damaging the economy. Businesses couldn't get the credit they needed to operate. People couldn't get loans to buy things. The government, rightly, rolled it all back a bit. More people were victims of the "responsible lending" requirements than had been of the supposedly irresponsible rules that had previously applied.

      • +1

        Totally agree… thankfully things have turned around a bit over the past year. Banks were in the middle of rolling out the next round of nanny-state regulations when the they started hearing about things being wound back.

        Not a moment too soon. Some of the stuff in the last batch of changes were just absurd.

      • its refreshing to hear someone say this, not the normal;

        "banks are evil and made me apply for that loan I could not afford"
        "banks are bad and forced me to get that car loan for that car I cant afford"

  • +3

    He ended up in a tight spot and trying to neg

    He can discuss with them hardship and possibly some repayment terms….
    But its still their debt.

    Moving to a new country and immediately racking up excessive debt you cant afford…..great move

  • +20

    Yet another case of "it's always someone else's fault"

  • +3

    Sounds like he got a China Union Pay card and hit up Star casinos

  • Maybe your friend told NAB he was going to buy a Car. ($40K).

    Repayments on $40K, did they think about that?

    Maybe make the payments or sell off the trinkets.

    Go see a Credit Counsellor,

  • -1

    Tx for the replies. Maybe I should have stated a few more details to start off with. He moved here and with limited funds as backup due to it be very costly for visa fees, deposit etc. I know this feeling very well. I spend most of my life savings to bring ny family over as well.

    He thought 40k would ve a good backup. He didn't spend the entire 40k. Not 100% sure how much was spend. He is happy to pay back but he had the option of taking a lower salary due to the companies financial situation or find other employment so he is busy looking but in the meantime he is getting paid less. Tx for the link on the hardship stuff. Will send that to him.

    As for wanting to know how he got a card so quick, that was me wondering htf he got it so easily where i had to work 3 months with a better salary and got a smaller credit card lol.

    • +2

      He is happy to pay back but …

      So he can afford to pay back? Not quite sure what he meant by "happy".

      From your original post:

      With NAB on the repayments but asked me today if this wasnt reckless of them to start off with.

      This tells me, somewhere in his brain knows that, the money he spent on was discretionary and now blaming on the availability of the credit. But gut feel is he spent the money on essentials, but blame the credit for his situation anyway.

      Depending on where he spent the credit on, he might need counselling.

      • -4

        What I mean by "happy" is that he is willing to pay back the money as he knows he used it. Have to say there's a lot of hate on these posts. He wants to pay the cash back but due to getting less income and hoping to get a new job in the coming months, he's just looking to get NAB to assist him through this period. As soon as he gets a new job he'll start putting in more cash. Didn't expect so many bad replies from people being so judgemental of someone who is going through a hard time.

        Things he bought were mostly furniture to set up his life in Aus. He went to NAB but they said because he is still working they can't assist him with a lower payment. That is why he wanted to know if there was another way to get them to give him a few months to just get another job and be on his way again.

        • +1

          Please send your friend this info https://moneysmart.gov.au/managing-debt/financial-counsellin... this is a government website - NAB will need to push from some external who knows about lending conduct and can advocate for your friend. Remember NAB will protect its financial interests first.

        • +4

          Too late now, but there's so many free and good furniture on FB.

        • +2

          The hates comes from lack of relevant details, leading to readers jumping to conclusions. Also the way you end your original post:

          He is responsible correct?

          But sure, have to say there's a lot of hate on these posts.

          All the best to your buddy

  • +5

    Not reckless lending…its attitudes like this that make it harder for people getting loans and mortgages. Its just irresponsible customers.

    • Australians are debt junkies.

      Aussie personal credit card debt nears $20 billion despite huge gains made during pandemic
      By Stuart Marsh • Senior Producer 1:40pm Jan 13, 2021
      https://www.9news.com.au/national/australian-credit-card-deb...

      Australian households have more mortgage debt than almost any advanced economy, a new OECD report finds. It blames one key factor.
      Bianca Healey Jun. 15, 2021, 5:25 PM
      https://www.thechainsaw.com/australian-households-mortgage-d...

      Lenders making it more difficult to borrow doesn't help their bottom line but it helps people from getting rekt by debt.

    • Not only that, but higher interest rates and fee's as the lenders try to recoup their losses.

  • Not everyone is like your friend. Many people given the same card and terms will pay off the balance at the right time, all the time. They are unprofitable for the bank.

    Your friend (and similar) is very profitable and makes up for all the unprofitable customers.

    He ended up in a tight spot

    But did he have a good time?

    • +2

      He ended up in a tight spot

      But did he have a good time?

      Probably ended up in several tight spots ( ͡° ͜ʖ ͡°).

    • +2

      I thank OPs friend (and all the other dumbasses out there) for funding my CC churning habit

  • -1

    According my to knowledge once you sign the dotted line it doesnt matter if they gave him a 500k credit card. He is responsible correct?

    Do you or your friend know what using a credit card means? It means borrowing money. People borrow a lot more to buy homes via mortgages, which are secured on property.

    There's a saying: "He who borrows what isn't his'n, must pay it back or go to pris'n."

    I hope this experience sets your friend up for a successful life down the track, by avoiding all unnecessary debt.


    One out of the box solution is to use Paul Getty's principle, but bear in mind the saying above: If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem. Nah, actually, don't tell your friend to apply for more credit cards, not sure if you're sure he's reckless or the bank is.

    • -1

      It a thread full of people with no clue of bank lending criteria laws that must be followed !
      If they don't follow them they can be sued .
      Neg away again and don't bother looking it up .

  • +2

    What a numpty, people like your friend make it more difficult for normal people to get loans.

  • wait for it to go to debt collection and then offer to repay 20% of the balance

    • hah, yep I'm sure bankruptcy is what he is hoping to achieve

      also debt collectors arnt exactly "friendly" people, they will hound the living day lights out of OPs friend

  • +3

    Spend within your means - was taught this for a very young age. I think your friend is a moron

    • +1

      "think"

      I think OPs friend is confirmed a moron

  • Usually banks need at least a months worth of payslips before approving any credit so the fact your friend was approved without providing this is strange. If this is actually true, there could be a responsible lending issue, but he would need to go through AFCA for them to assess the circumstances of the case

  • +1

    I recall watching a 40yo friend max out all his credit cards on clothes and crap because he intended to declare bankrupcy the following day. The rest of us pay for the poor choices of a few.

  • +2

    Banks aren’t as responsible as much as the individual.

    Stop displacing accountability.

    Tell your mate to apply for a lower limit CC elsewhere.

  • Welcome to the world of personal responsibility.

    Until there's a crash and the banks need to be bailed out with public handouts.

  • +1

    More like reckless spending.

    Got to be thankful I've never needed or wanted a cc.

  • +8

    Story full of holes. No big lender (especially the Big 4) will give someone a credit card without the applicant providing 2-3 months of historical payslips. If your friend hasn't even started working yet, no way they would have gotten their 40k limit cc without providing some fraudulent documents from their end.

    • -1

      Nothing fraudulent was provided. If so he wouldnt have wondered what to do. He did provide emoyment letter but didnt even work 1 day.

      • +2

        why would he admit he committed fraud to you?

        you clearly have loose lips if any of your OP is true.

      • +4

        Are u sure? It really doesn't add up. Either the bank made a massive cockup in which case it should be raised (though doesn't excuse friends irresponsible behaviour) or something dodgy was provided as that limit would be questionable even with proof of income at 85k.

      • +2

        Either your friend is bullshitting you or you are bullshitting us with your story.

        Why dont you give NAB a call and pretend you want to apply for a CC with the same details and see what they say?

    • agree with you.

      It doesn't stack up. $40K limit is pretty high and no big 4 bank would provide that without verifying income, etc. The 1:2 ratio can't be right / or within internal regulations.

      • Well, he lodged a complaint with the AFCA so doubt he did anything fraudulent. I'll try and find out what happens at the end. Assuming he will tell me if something good happens.

  • I wouldn't really say it's reckless. The pure reality is that if your friend maxxed out the $40k card on an $80k salary, he would have the capacity to pay it off slowly over the course of 2-3 years.

    • 2 to 3 years would be a massive effort.

    • on that salary he will be earning roughly $65k a year after tax. unless he has virtually no costs of living (unlikely with a wife and kid) then 2-3 years is not really realistic, remember he will likely be paying upwards of $8k a year in interest alone.

  • +11

    I call BS on your "friend" getting approved for a 40k limit credit card with only an 85k salary…….fresh to country, still in probation and sounds like not even a citizen or PR

    an 85k including super salary is only 61k take home per year, no one is going to give you a limit so high on a salary like that (if you told the truth)

    …………..or he committed fraud to substantiate his credit worthiness to the bank

  • +2

    Your friend signed up for a credit card, so surely he knew what he was doing? It's a two way street.

    Tell him to stop looking for someone to blame and take some responsibility for it

  • Reminds me of back in the 90s - I was on a 4 year international assignment to the USA. During pre-visit set up bank accounts etc.

    I had an Amex in Australia, so I asked Australia AMEX to switch me to a US Amex - they said this wouldn't be a problem.

    I was in a department store over there, getting furniture etc, and they had a sign on the wall "Driver's License and one major card and we will give you a "store credit card" - I went to sign up for this. THey entered my details and responded "you have zero credit history - the system is rejecting you" - I was not surprised at this, and went on my way. Now because they had bounced me the credit agency (TRW) had to notify me in writing.

    In the meantime, being a good customer of Amex, I was using my US Charge card, and on the same day, I get two pieces of mail, both from TRW. One said "Because of your excellent credit history with Amex, we are offering TRW Credentials - basically allowing you to vet any lookups on your credit file and other things… The other, from TRW, said because of your lack of a Credit History, we have rejected your application for XXX Store Credit… aah, the irony…

    That was when Murricah was using Checks a lot (they still do), and I can remember getting a refund check from something for 2 cents…. barely worth posting… But hey, it's America.

  • Ah this sticks in my throat… dude wanting to know if it was "reckless" of NAB to approve $40k… what did he show / tell them to confirm he could make a repayment of $1200+ per month - I would give my eye teeth to see the application form. It's all fun and games until someone loses an eye…. and tries to shift responsibility.
    Having said that, if his situation has now changed and he is in between jobs, he can apply for hardship, which involves deferral of payments and interest (It's not a get out of jail free card). However if he is still working, as the bank has indicated, he has to make the repayments. Are there other areas of his budget where he can cut back?
    Remind him that if he wants to push, and it goes to AFCA, they will look at the information he provided to NAB in the first instance.

  • +1

    How much is he owing on the card?

  • He doesn't want to take the rest of the money and pay the card with that and putting him in more debt

    He couldn’t do that even if he wanted to…. It’s not how credit cards work

    He understands that he used the money and is more than happy to pay back everything, he just wants a lower payment for a few months to hopefully get everything back to what it should be

    Call NAB and apply for financial hardship

  • …I had a NAB cc and even my highest limit was $25K.

    1. Don't spend more than you can pay back in any given month.
    2. Don't ever pay interest on a cc or a personal loan if you can help it. '
    3. The minimum monthly repayment is a guide to the absolute minimum. Please, for the love of everyone's sanity, don't just pay that every month.
    • +1

      Card statements even show how much interest ull pay if you pay the minimum repayments.

      • I know! And still, I have had to hear friends say "Oh, I can just pay the minimum monthly repayment and I'll be fine!" queue screams of anguish

        Still, will never top "I won't get into an accident, and if I do, I'll swerve to hit a tree so that I only injure myself!" fark…

        • +1

          for people who haven't seen this on their statements, for interests sake

          a bill I have on hand says:

          Pay all the card off by the due date @ $5,892.34 - $0 interest
          Pay only the minimum amount ($118) - $23,820 interest and take 63 years
          Pay $298.42 instead per month (rather than the minimum) - $1,269 interest and 2 years.

          hmm the savings, I wonder which one ill pick

  • Boohoo, keep up the repayments, try and balance transfer if there's a better offer at some point.

    Wilful blindness at its best, ain't no free lunch with credit cards. Maybe he can borrow off family or friends & pay it down but I wouldn't recommend putting your hand up.

  • Personal responsibility.

  • People have lost their jobs, spent up big on credit, and then had no way of paying back what they borrowed. It is possible to negotiate, and renegotiate, until you're paying back pennies on the dollar. If you're paying more than a debt collector would, they will be willing to negotiate.

  • If they can, I'd recommend balance transferring across to another card offering 0% interest for 2years.
    That way they can make the minimum repayments and add whatever extra they can each month without the total debt increasing each month.

    If they haven't paid it off in the two years, just do the same thing - balance transfer to another card offering the same type of deal. Rinse and repeat until the debt is paid off.

    But yeah, pretty bad situation to get yourself into - would advise they don't use a credit card in the future unless they know the potential dangers, and the best ways of using one.

    • It's unlikely another credit provider would look at someone with an existing $40k card on an $85k income and think 'yeah, this guy is a good credit risk'. Remember that banks assume you use the entire available line of credit when considering giving you more.

      0% for X years is also a massive trap. What usually happens is the person continues to spend normally without paying back the old balance. The inevitable day comes when it's time to pay it all back and…. oh sh~t!

  • Change the title to Irresponsible Borrowing from my friend. Makes more sense.

  • payday lenders and pawnshops have always existed to take advantage of the desperate

    need some cash to pay the rent or buy food - sure we can lend you $300 at 10% interest - per day …

  • Why can't people take responsibility for their decisions and actions anymore? Why is it always someone else's fault?

  • The matrix. A prison you can't smell, taste or touch. To escape it one must learn to think outside the box. Become knowledgable, wise, creative, unorthodox and noncompliant. https://t.co/intP3BlSbu

    Debt is the opposite of freedom.

    Do your friend a favour and ✂️ the 💳 in ✌️.

  • Your friend did not do anything bad (maybe not a very smart move but still) and NAB is a solid financial institution and would be willing to arrange and accommodate to get the loan back.

    To clear your confusion - the difference between you two is our bafoon-headed government and specifically Treasury and APRA.
    You arrived during the time of good and stable economic growth and were a subject to prudent checks and reviews. Your friend arrived during time of slowing growth and at the end of business cycle that aforementioned institutions tried to extend and pretend at any cost. Hence he was given "other man's profit" on his credit card and sent off spending.

    This is not unusual - for instance in 2008-2009 China unofficially did underwrite all private debts and instructed their bank to lend money to anyone with a pulse. This was political and power move. Similar was happening with subprime mortgages in 2006-2007 in the US but there was a different driver - greed.
    In Australia we have it all - moronic politics, stupidity, greed and dirt trading. Welcome!

  • So just an update on this. He made a complaint with AFCA. NAB got back relatively fast I believe, but NAB said they were in the right. They offered like 1k for any inconvenience (I have never heard about a bank giving money away for the inconvenience hahaha). He declined it and something about them trying to explain they worked it out based on 50% of his household expenses etc. but he was the only one bringing in money so…

    Anyway, eventually, an agreement was reached. All payments made towards the credit card up to now will be subtracted from the total amount outstanding. The remaining amount will be paid back to NAB with no interest over 5 years or something. No credit impact will appear with the possible exception of NAB themselves (internal systems) but not on his credit history. So doubt he will get anything from NAB again.

    So, the bank gets their money back (without interest) and he has a lower payment each month with actually paying it off and not just the interest.

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