This news comes as financial experts have called for more stringent checks before people are issued with credit or store cards. The Government, which cut the stamp duty on credit cards to €30, collected just over €61 million on the tax last year, down from €107.3m in 2008.
Industry groups have, however, called for the Government to abolish the tax altogether, with the Irish Payment Services Organisation (IPSO) believing the tax could discourage banks across Europe from entering the market.
Irish Brokers Association CEO Ciaran Phelan said there should be a new form of regulation to ensure a strict application and verification of maximum net disposal income thresholds to all debt applications, including credit cards, store card applications and money lender activities.
“Some brokers who offer debt advice believe that the mortgage arrears problem is being exacerbated as borrowers are taking too much comfort the Government’s repossession moratorium and as a result have prioritised non-mortgage debt, such as credit card payment over their mortgage repayments,” he said.
Member of the Credit Union Development Association (CUDA) Brian Douglas said while mortgage debt and home repossessions have dominated the media, lesser attention has been given to the dangers of expensive revolving debt such as credit cards.
Mr Douglas said: “Credit cards are an extremely expensive form of credit”. He said: “Providers of all forms of credit have a responsible role to play in helping people to avoid falling into dire financial straits that many have found themselves in due to expensive short terms credit.” He said credit cards are useful for those who have the financial discipline to operate them correctly. However he added, a huge number of people do not.
He said: “In the last decade acquisition of a credit or store card has simply followed the click of a button to submit an application form. Unfortunately, very little attention was paid to the applicant’s ability to diligently manage their finances or the affordability of the applicant to repay his/her debts. This has resulted in not only thousands of people running up huge credit card bills which they are unable to repay, but it has also culminated in a culture whereby people purchase items and services they cannot afford simply because they can “stick it on their credit card” and worry about payment at a later date.”