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On this Page 28
What you shook
The Australian Women's Weelety
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In part 5 oí our confidence course we take a close look
at money matters. Understanding your rights where
banks, interest rates, credit, assets and privacy are
concerned will help to avoid much financial sadness
Women alone
Home mortgages, credit cards and
loans are no longer labelled "For
Men Only." Everyone, regardless
of sex or marital status, has the right to
equal access to credit.
But many women, whether single,
married, divorced or widowed, are
intimidated by the thought of having to
organize the course of their own
financial responsibilities.
The Women's Affairs Office of the
Victorian Premier's Department has
compiled a booklet called "Every Wo-
man's Guide to Money and Credit," full
of useful advice for women trying to
become part of this market, (lt will be
available from the Women's Affairs
Office, 1st floor, 1 Treasury Place,
Melbourne, 3002.)
lt is important for a separated or
divorced woman to establish a good
credit rating in her own right. First, she
should close any joint accounts, and
open a separate one in her own name.
This will help to avoid inheriting a
husband's or ex-husband's bad credit
reputation.
lt is important for ANY woman,
particularly when she is married, to open
a separate cheque or savings account, lt
will improve her chances of obtaining
credit if she can show she has
maintained accounts responsibly.
"Every Woman's Guide" points out
social security pensions and benefits are
considered acceptable income in a loan
application. Maintenance can be ac-
cepted in some cases when you can
show that the husband is a reliable and
regular payer.
Out on a financial limb and with no
security to back her loan application,
the woman alone may be asked to
provide a guarantor - a man or woman
of good financial standing who is willing
to back her.
Many widows find themselves short of
money while the husband's estate is
being finalized. They may need a loan to
pay debts and cover their own needs
until the time insurance claims are paid
and probate is granted. Lending institu-
tions will often make loans against the
security of the will.
If a widow finds her finance is
"frozen" during this time, she may be
eligible for a pension, even if only
temporarily before probate is granted.
A widow can also obtain relief from
immediate financial pressure in other
ways:
. If a mortgage on the home is being
paid off she should apply to the
mortgagee for a reduction or suspen-
sion of payments. She should inform
banks immediately of the partner's
death, before payments fall behind.
. She can make an application for
reduction in instalments and assistance
with rates if the house is financed under
the Defence Services Homes Act.
. If it is a Housing Commission home
she should advise the commission of he
husband's death and apply for a transfe
of tenancy and a rent rebate.
"A widow should not automatical!
assume that she will have to continui
paying off her husband's debts," says
the booklet.
If her husband took out a persona
loan, and he was the principal borrower
he may have also taken out loar
protection insurance, which could cove
what is still owing.
If payments are not up to date, th«
widow or the estate may have to mee
them. For a larger or housing loan taker
out in joint names, any outstanding deb
has to be met by the survivor. Banks car i
arrange reduced payments.
Banks will often pay funeral costs
from the husband's estate if other mone;
is not immediately available.
Legal aid offices, magistrates' courts
and the Public Trustee are among the:
best sources of advice.
Banks
«ll
Banks use strict rules to assess a ;
person as a good or bad risk for a ¡t¡
loan. Information not normally ,
available to the public has been given to j$
the Weekly by major banking sources, lt [
instructs bank staff how to judge the *
credit worthiness of people seeking i,
l
Interest
The Weekly's financial expert Henri
Aram says the most costly trap for
borrowers lies in the way the
interest rate is calculated.
"One simple word makes all the
difference," he says, "ls the interest
reducible or is it flat?"
Where it is "reducible" it is calculated
only on the amount outstanding at the
time. The borrower is given the benefit of
repayments he or she has made during a
period of the loan. He suggests the
borrower beware when the interest rate
is quoted as "flat."
This means you will pay a constant
amount of money in interest over the
entire period of the loan, even while the
loan is reducing.
There is no allowance made for
money you have already paid back on
the loan principal.
In fact, a "flat" rate of interest works
out nearly double the same rate quoted ¡
to the borrower as "reducible."
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ioiow about credit

Confidence Course - Part 5

Bank managers are wary of those
who seek loans at branches that
are far from their home or work.

loans. Staff are warned about "fast
r talkers" who want their loan im
f mediately, and applicants who apply at

branches far removed from their home or
work.

They are told also to regard as
potentially higher risks unskilled wage
earners, salesmen not attached to
well-established firms, self-employed
people in small businesses, hotel,
restaurant and club employees, taxi
: drivers, and freelance actors, artists,
[ musicians and writers.

However, many such applicants have
individually different credit ratings, and

other criteria would be taken into
account.

lt is the ability to repay that matters,
and here they will take into account job
training, prospects, where you live and
your life-style, past borrowing experi-
ence (and any security you can offer).

lt can be better to be young with little
to show as savings than to be mature
with a high income and no real assets.
With youth on your side, the bank will
see you had little chance to save, while
the older, seemingly richer person can
be seen in a poor light for apparently
sloppy savings habits.

If you have not lived long in the same
Place, the bank will be wary of you.

The bank loans staff will accept that

many people change residence for
advancement reasons, but will not give
you as much of their time if you live in a
caravan park or cheap hotels.

Regular income is a top priority. The
bank data warns staff against "feast and
famine" incomes, that rely too much on
overtime, or sales commissions.

If you are married or have a de facto
relationship, some banks will take your
partner's income into consideration, but
may require you then to take the loan out
under joint names.

Being over-confident about the loan
could be worse than going in fear and
trembling. Says one bank's instructions

on how to handle borrowers: "An

applicant's optimism should not be
allowed to influence your appraisal."

If you are a single applicant for a loan,
the bank may expect you to show you
are able to commit about a third of your
take-home pay to fixed repayments.

If you have dependants, and there is
only one income, they may expect a
quarter. Working couples can pay 40
percent of a joint income.

Personal loans may be approved for
purposes such as holidays and travel,
buying a car, boat or caravan, or
improving and renovating. They can be

secured or unsecured - if the amount

lent is large, over a longer term, the bank
may require some back-up security.

Credit cards

Women are becoming a more

important market for "plastic
money" - the credit card.

One major company, American
Express, has highlighted the fact, lt
featured a woman in its advertising
campaign last year and will direct even
more effort to this market this year.

Said a spokesman for another major
credit card organization, Diners Club:
"Women are becoming more in-
dependent in money matters - even the

woman who is dependent on a spouse's
earnings."

Executives from three major credit
card companies, American Express,
Bankcard and Diners Club, have
answered for us some of the most
common questions women ask about
credit cards.

Am I eligible for a credit card?

Anyone over 18 can apply. American
Express says it would not usually

CONTINUED ON PAGE 31

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Hie Australian Women's Wf

lifidence Course

Consider applicants with an income less
, than $13,000.

will I inherit my husband's (ex or

deceased) bad credit reputation?

The three companies say each ap-
plication is treated on its merits, whether
the applicant is single, married, divorced
j 3r widowed. But a married woman with
I ier own income and who is financially

independent would be preferred over
one whose income is tied to a husband

#ith a bad credit reputation. _.

What type of services can credit
cards offer?

They range from purchases to cash
advances and time-payment travel, and
free accident policies. Bankcard will
soon offer overseas services with three
million retail and service outlets (res-
taurants, for example) in 140 countries
and territories throughout the world.

ls there a limit on the amount I can

spend?

Bankcard sets what it thinks is a
reasonable limit, judged on your income
and assets, when the card is first
offered. Diners Club and American
Express have no pre-set spending limit.

With Bankcard one major bank bases
its limit on 10 percent of the applicant's
gross yearly income, with recommended
lower limits of about $200 - $300 for
younger, recently employed applicants
or those doing training or study.

1 Could I get into serious debt using a

credit card?

Yes, it is possible. But, the companies
point out, card holders should be able
to keep a close eye on their spending
through their receipts.

What sort of questions will I have to
answer when applying?

The companies are trying to assess
your credit stability. They will probably
ask about your employment record,
dependants, information about your
spouse, his job and income as well as
your own, your debts and assets.

Do credit card companies require
previous arrangements with a business
before they will accept my card?

Yes. Look for the credit card com-
pany sticker. If it is not displayed, ask.

Do credit card companies use a
credit checking bureau? If so, does this
mean information on my personal life
j will be available to other people?

Bankcard, American Express and
Diners Club all use a credit bureau.
Bankcard will only use a bureau if the
amount of money applied for is large and

applicant is not known to the bank
he is applying through.

All say the information is treated
confidentially.

ls it cheaper to use a department
store's own credit card when paying by
instalments?

According to Henri Aram, Bankcard is

still the cheapest consumer credit
facility, provided it is not abused and you
stick to the rules that govern its
operation.

If the temporary loan account with the
bank is cleared within the set time limit,
there is no interest at all. After that,
interest accrues at 1.5 percent a month
(18 percent a year).

Major department stores also usually
have a no-interest period. Once this
lapses however, their monthly interest
rate is slightly higher than Bankcard's.
For example, both Myer and David Jones
charge 1.85 percent per month interest
on money still owed.

Privacy

Some couples, married or de facto,

lead separate financial lives. But
information about them is usually
kept on one file in the credit checking

bureaux.

In NSW married women (or those in a
de facto relationship) who are financially
independent may request a separate file
by writing to the Credit Reference
Association, 40 Market St, Sydney, and
Dun and Bradstreet, (Australia) Pty Ltd,
13 Wentworth Ave, Sydney. The State
Privacy Committee offers this advice.
Both organizations are the major central
credit checking agencies in NSW.

The Privacy Committee is unique to
NSW. In other States, contact consumer
affairs authorities for advice on any
concerns about treatment by lending
agencies.

A divorced woman in NSW was told
by a financier that she had been rejected
for a loan on a report by a credit bureau.

Some unlucky women ininti ïheir

ex-husband's bad credit reputation.

When she went to the bureau, she found
the information on her file was mislead-
ing, and out of date.

A smorgasbord of debts incurred by
her husband included money and
purchases on credit cards and borrow-
ing agencies, and even some court
judgements about his debts.

She was able to show that she had
not used her credit card, and was not
linked with his debts.

She requested a separate file, which
meant a positive step taken in creating
her own independent credit reputation.

The Privacy Committee is a watchdog
over NSW credit bureaux, lt says
customers who have loan applications
rejected on the strength of a bureau
report can immediately have their file
read to them over the phone to find out
why. This way many mistakes are

corrected.

You can obtain a copy of your file
through the Privacy Committee at any
time, but can only have it read on the
phone immediately after the refusal of
credit - so the exchange of facts tallies
and no one can impersonate you.

Fear of the unknown has made many
people wary of seeking credit, says
Privacy Committee executive member
Bill Orme. But he sees over-commitment
in loans a bigger problem than the
outcome of any credit bureau mistakes.

"The bureaux are for members only,"
he says, "And for checking only credit
reputations - not employment, health,
or any other aspect of your life."

CONTINUED OVERLEAF

The Australian Women's Weekly Confidence Course

FROM PREVIOUS PAGE g

Loan sharks

The NSW Consumer Affairs people

have a game - a very serious one -
called "spot the loophole." lt is all
about finding errors in the contracts put
out by exorbitantly high-interest money
lenders (often called loan sharks).

And it is a lesson to anyone tempted
to enter into an agreement that will put
them on a debt merry-go-round which
they may never get off.

The moral of the story is: shop around
for a better interest rate, or some good

sound advice.

Super-high interest rate lenders do
less business than reputable agencies
such as banks and building societies,
but thousands of people are vulnerable.

In some areas where "loan sharks"
have a captive group of people on their
books, a desperate family will decide to

pay a telephone and gas bill by taking
out a cash loan of $200 at 200 percent.

lt means they would be committed to
repaying a total of $600.

One money lender calculated his
interest rate on a contract at 184.6
percent. When the borrower showed it to
Consumer Affairs, they found the loan
was actually based on 193 percent
interest, lt was a loophole, making the
contract unenforceable under the
Money Lending Act. The lender lost the
lot. The situation is nation wide.

In one consumer affairs authority's
shake-up of money lenders, it was found
that one lender's clientele of some 500 in

an outlying suburb of a metropolitan
area had little hope of getting off the
"never-never" system.

One woman was menaced regularly

by a debt collector who arrived to claim
payments on household goods when-
ever she was trying to back the car out of
the driveway to collect her children.

A salesman on commission, he also
coerced her into signing up for more
goods on time payment.

Once, he held her captive in her own
home until she scraped together all the
small change she could find to meet a

repayment.

Finally, she wrote to Consumer Affairs
in full detail, and they began in-
vestigations. "I would have signed
anything to get away to my children,"

she admitted.

Another woman who had been taken
in by a money lender using "cheap"
Christmas hampers as a bait to open up
loans, wrote: "I never paid out a loan
without having more money advanced.

"The collector would threaten to tell
my husband if I didn't."

Low incomes

ASouth American who had been in

Australia for two weeks desper

Lately needed $200 to buy tools so

he could start work with a car man-
ufacturing company. Although he had
excellent references and a guaranteed
job, he was paying off his air fare and a
bank refused to lend him the money.

The NSW Smith Family charity or-
ganization gave him the start he needed
with money from its interest-free welfare
loans programme.

There are various sources of welfare
or low income earners' credit around
Australia. A call to an emergency
number such as Lifeline can help direct

those in need.

In Victoria, anyone with residential or
work ties in the Fitzroy area of Mel-
bourne can join the Action Resource
Centre for Low Income People (116
Fitzroy St, Fitzroy) for $2, and can
become eligible for a loan of up to $100
for any requirement. This is paid off at $2
a week, and regular repayments es-
tablish a credit rating which the
centre's own credit society, and others
outside, recognize.

Lifeline in Melbourne refers callers
with credit problems to the Credit
Co-operative Association of suburban
credit unions, which can help them learn
how to get their affairs in order.

The State Bank of South Australia has
low-income loans, government
subsidized under the Common-
wealth-State Housing Agreement. These
are the only totally government-funded
bank loans for housing and are for
people on a gross pay of no more than
$214.30 per week. A similar type of loan

is available in NSW through the State's
Rural Bank, and in Victoria the
Co-operative Housing Societies and
Home Finance Trust cater for the
low-income family, including single
parents and widows.

Maximum income to qualify is $250
gross a week, and maximum loans are
$25,000 on interest rates from five
percent to 8.5 percent.

In Queensland, the three main wel-
fare agencies, Lifeline, the St Vincent
de Paul Society and the Salvation Army
all provide financial advice on obtaining
loans, sorting out money problems and
budgeting. However, they don't lend

money.

In Western Australia various trusts,
Government and private (such as the
Citizens' Advice Bureau's Distressed
Persons' Relief Fund, the Isabel Werne
Trust, the Wittenoom Trust Fund and the
Department of Community Welfare's
trust fund) can lend money - but this is
often subject to a means test.

Assets

Whoever considers you for a loan I

will want to know a great deal I
about you, particularly about I

your debts and your assets.

Debts can include any hire purchase
agreements you have entered, rates,
taxes, mortgage, registration and insur-
ance costs for cars, overdrafts, other
loans, rent and estimated weekly living

expenses.

Compile a list of assets. This can
include real estate (a block of land or
your house), your bank balance, car-
avan, car, tractor, the value of furniture,
TV, stereo, piano, other savings ac-
counts, stocks, insurances, bonds,
major household appliances like a
washing machine or refrigerator - and

character references.

Most people will need to have be-
tween a quarter and a third of the cost of
what they want to buy (a home, car, new
roof) for a deposit.

The bank or building society will then
assess your ability to pay back a loan.

Discrimination

As people become more aware of

anti-discrimination laws in some

Lstates, bias against women seek-
ing credit has eased but there are still

forms of subtle discrimination.

As a result, various banks have
started their own women's advisory
services, staffed by women, and finance
counselling centres have been opened
at some community centres and local
councils. For example, the Fremantle

City Council and Wanneroo Shire in
Western Australia have both started
financial counselling for people in
trouble, or lacking confidence to talk to
bank managers.

The University of WA has a similar
scheme operating through its Social

Work Department.

And in South Australia, Victoria and
NSW there are State offices of Equal
Opportunity.

$