Woman starves to pay debt

KASHKA TUNSTALL
Last updated 05:00 23/11/2013

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Waikato pensioners are starving and raiding their KiwiSaver accounts to pay back mounting credit card debt.

A Hamilton financial adviser said an "alarming" number of retired and elderly are asking for help dealing with credit card debt.

Hamilton Budgeting Advisory Trust manager Clare Mataira said financial abuse of the elderly is a growing problem and she is pushing for banks to tighten their lending policies.

"We're seeing people use credit cards for living expenses.

"I've seen more superannuitants in the last four to five years using credit cards for living expenses than in my whole career," she said.

A superannuitant and grandmother was brought in to see Mataira after the woman's daughter found letters from the bank showing extensive debt.

"The children were not aware of how difficult it was until one day they opened some mail and asked questions," Mataira said.

They had noticed their mother becoming thinner, but she had not told her children or even indicated that she was in financial trouble.

"They didn't realise how difficult it was," Mataira said.

"She admitted she had not spent money on food in order to afford paying bills coming in . . . that's just one example, there's quite a lot of cases for all sorts of reasons."

Her children forced her to seek help, and Mataira helped the woman sort out her expenses.

Another woman who came to see her had dipped into her KiwiSaver account to pay off a loan from her bank.

"People are coming in very stressed that they can't make the repayments, they're struggling. It's a disturbing pattern that's starting to emerge," Mataira said.

She said she was aware that people do not always disclose their full financials to their banks, but called on bankers to take greater responsibility when lending to the elderly.

She said when someone is 85 it's unlikely they are working.

But NZ Bankers Association chief executive Kirk Hope did not think a specific policy to address pensioners using credit cards is needed.

He said with the majority of banking customers operating their cards without issues, it was not necessary to define a policy for a small number of customers.

"The challenge is, you can't just set a block rule on age . . . it's very difficult to set a rote rule on it."

Hope said banks had robust policies in place when providing credit to people, and customers were obligated to tell their loan providers when their circumstances changed.

"Banks don't automatically increase credit card limits - if they offer, you need to agree," he said.

"Banks will ask for a range of information before they approve credit, but that doesn't stop people providing false information to banks."

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He said if people were finding themselves in financial difficulty, they needed to talk to their banks as soon as possible because they could assist in hardship.

And banks themselves say policing the elderly applying for credit cards could be construed as discrimination based on age.

A BNZ representative said the bank did not actively market limit increases to customers over the age of 65.

"If customers over 65 request a credit card or limit increases it is processed as for any other customer," they said.

"When we issue or increase a customer's credit limit we assess their ability to service the debt they are taking on. This model does not take age into account as doing so would be discriminatory."

Age Concern New Zealand chief executive Ann Martin said many older people are already under financial pressure from power and gas bills, the cost of basic ingredients for a healthy diet, GP fees and the cost of dental care, eye care and hearing aids.

"Most older people rely on New Zealand Superannuation and, being on fixed incomes, they do not have the luxury of being able to pay extra costs," she said.

"This makes them particularly vulnerable to hardship, especially if they're faced with unexpected expenses. Something has to give."

She said pensioners were of the generation that believed in paying their bills in full and on time. "Even if they have to suffer for it by going into debt, not eating healthily or not heating their homes in winter," she said.

The office of the banking ombudsman said the issue had only been raised once over the last year.

"We have had one inquiry this year from an elderly person concerning credit card use and ability to repay, but there is no evidence of a more widespread issue," Banking Ombudsman Deborah Battell said.

- Fairfax Media

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