Barefoot Investor issues an urgent warning about shady banking practice that sees millions of Aussies LOSE their hard earned cash
- Barefoot Investor Scott Pape has warned about the dangers of credit cards
- Many banks offer teenagers credit cards as soon as they turn 18
- To incentivise the cards, the banks offer interest-free periods
- When interest-free period ends, the interest rate is hiked, leaving them in debt
Finance guru Scott Pape, also known as the Barefoot Investor, has issued a warning to Australians about a common banking practice that has left thousands in deep credit card debt.
Banks across the country allow teenagers to get a credit card as soon as they turn 18, and incentivise the cards with promotions at university orientation events and interest-free promotions.
Scott Pape has warned Australians about the dangers of credit card debt
One of Pape’s readers wrote into explain how a ‘credit card gift’ from a bank very quickly turned into a nightmare
After the introductory period ends, the interest is suddenly increased to around 19 per cent or more, leaving those who have not paid off their cards in full facing huge bills.
As one of Pape’s readers discovered, while the credit card seemed like a ‘gift’ from the bank at the time, it very quickly turned into a nightmare.
‘I was a pure mathematics undergraduate who could integrate the most obscure of orthogonal projections, but I seemingly couldn’t change the trajectory of a $12,000 credit card debt,’ he explained in a letter.
‘You made me realise that CommBank’s “present” of a credit card on my 18th birthday was the worst thing I could have received. It’s now blended! In all seriousness, thank you.’
Scott Pape has made a name for himself as the Barefoot Investor, and has written several popular personal finance books and also writes a weekly column. Pictured is Scott and his wife Liz
Pape responded to his reader’s letter with some blunt advice.
‘Often when I’m talking to educators about getting money taught in schools, I get cornered by the “Maths Mafia” who assure me that financial literacy is their bag.
‘And when they do, my heart sinks a little. That’s because I firmly believe that managing your money successfully is more about literacy than it is about numeracy,’ he explained.
‘Money is a language, and if you don’t know how to speak it you won’t understand it … and you’ll be manipulated by fast-talking behavioural marketers who do.’
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