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Centacare warns low-income families on credit card trap

The overuse of credit cards at Christmas will drive low to middle income families to financial ruin, according to Centacare Sydney financial counsellor David Bell.

The Catholic Weekly reports that he also warned consumers to avoid using credit cards at all costs.

"People fall into the trap of signing up for three or four credit cards at Christmas without realising the significant impact it can have on their lives," he told the paper. "It's easy to fall into the trap of living for today, but that mentality can have dire consequences, especially at Christmas.

"Credit card debts of around $3000 are often accumulated over Christmas, which can take four to five years to pay off," he said. "People should budget for Christmas all-year round, not just at Christmas."

Mr Bell added: "I see people around February and March, who haven't paid their rent or electricity due to overspending at Christmas.

"Society puts pressure on people to perform for their families at Christmas, but I don't think children are so materialistic that they don't understand they can't have every toy."

Retailers are preparing to divvy up to $33 billion in sales between them in November and December, a figure Mr Bell finds disturbing.

"I don't think spending $33 billion in stores is the true meaning of Christmas," he says. "Giving and receiving presents is nice, but people should concentrate more on the faith side of things, rather than being caught up in the spending hype."

The Weekly says that St Vincent de Paul Society budget counsellors each see more than 600 people a year who have racked up a Christmas debt.

"Christmas brings out a lot of tension in families with no money, and problems such as domestic violence increase, which adds to the situation," said budget counsellor Sheila Kinsella. "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.

'Risk of financial ruin in credit card overuse' (Catholic Weekly 5/12/04)

Centacare Sydney

Needy hit by Christmas credit card crisis (Catholic Weekly 9/2/04)

3 Dec 2004