--- title: "Get to know your New Credit Card Laws - Sapience Financial" description: "Discover the impact of new credit card laws in Australia and how they will affect your ability to refinance loans or apply for mortgages. Be prepared for significant changes in managing your finances." url: "https://sapience.com.au/blog/get-to-know-the-new-credit-card-laws" date: "2026-05-26T14:45:29+00:00" language: "en-GB" --- # Get to know your New Credit Card Laws - đź“° Sapience General Archive - [ credit cards ](https://sapience.com.au/all-tags/credit-cards) - [ credit score ](https://sapience.com.au/all-tags/credit-score) - [ 🏠 Wealth Builders & Home Finance ](https://sapience.com.au/insights/wealth-builders-home-finance) ![hip pocket full of credit cards](https://sapience.com.au/images/blog/get-to-know-the-new-credit-card-laws-sapience-financial.jpg) There is a new problem in your pocket - New Credit Card Laws will catch many people out who need to apply for (or refinance) a mortgage. Reading Time: 6 minutes --- ### Get to know your New Credit Card laws New laws about credit card debts will be phased in from January 2019 and will have a long-lasting impact on your ability to refinance a loan, or even just apply for a mortgage. ### There's a new problem in your pocket. #### *Read in this article* - [Weaning Australians off their credit cards - there will be tears](https://sapience.com.au/blog/get-to-know-the-new-credit-card-laws#weaning-australians-off-their-credit-cards-there-will-be-tears) - [The end of easy money](https://sapience.com.au/blog/get-to-know-the-new-credit-card-laws#the-end-of-easy-money) - [The flow-on effects can include:](https://sapience.com.au/blog/get-to-know-the-new-credit-card-laws#the-flow-on-effects-can-include) - [When does this start?](https://sapience.com.au/blog/get-to-know-the-new-credit-card-laws#when-does-this-start) - [How is this relevant to me or my children?](https://sapience.com.au/blog/get-to-know-the-new-credit-card-laws#how-is-this-relevant-to-me-or-my-children) - [What to do?](https://sapience.com.au/blog/get-to-know-the-new-credit-card-laws#what-to-do) - [What's the one thing I need to know today?](https://sapience.com.au/blog/get-to-know-the-new-credit-card-laws#whats-the-one-thing-i-need-to-know-today) - [Frequently Asked Questions: Credit Cards & Borrowing Power](https://sapience.com.au/blog/get-to-know-the-new-credit-card-laws#frequently-asked-questions-credit-cards-borrowing-power) - [What is the ASIC '3-Year Rule' for credit card debt?](https://sapience.com.au/blog/get-to-know-the-new-credit-card-laws#what-is-the-asic-3-year-rule-for-credit-card-debt) - [Why does my bank care about a credit card with a $0 balance?](https://sapience.com.au/blog/get-to-know-the-new-credit-card-laws#why-does-my-bank-care-about-a-credit-card-with-a-0-balance) - [What is the danger of 'Securing' my credit card debt?](https://sapience.com.au/blog/get-to-know-the-new-credit-card-laws#what-is-the-danger-of-securing-my-credit-card-debt) - [How can I 'clean up' my credit profile before a home loan?](https://sapience.com.au/blog/get-to-know-the-new-credit-card-laws#how-can-i-clean-up-my-credit-profile-before-a-home-loan) ### Weaning Australians off their credit cards - there will be tears Australia's financial regulator ASIC has indicated a new approach to the future of credit card use. Their [report ](https://asic.gov.au/regulatory-resources/find-a-document/reports/rep-590-response-to-submissions-on-cp-303-credit-cards-responsible-lending-assessments/)would suggest an approach that could be summarised as, 'Credit cards should be used for short-term debt and if you're going to have medium-term debt, that's more appropriate for a personal loan'. **Sounds simple right?** This will create many unintended consequences for consumers and especially small businesses and startups that don't qualify for traditional security backed personal loans. **Quick facts**: In July 2018 ASIC [reported ](https://asic.gov.au/regulatory-resources/find-a-document/reports/rep-590-response-to-submissions-on-cp-303-credit-cards-responsible-lending-assessments/)Australians owed $45 billion on 21.3 million credit cards. Almost 550,000 credit cards were in arrears with an additional 930,000 in persistent debt and 435,000 account holders only making small repayments. Further 18.5% of consumers were overwhelmed by the amount they owed. ### The end of easy money From January 2019 funders and consumers alike now face new laws about issuing credit cards. Credit providers are now required to ensure customers can **repay their full credit card limit within three years** before providing a new credit card contract or increasing the limits on existing credit card contracts. > Up until now, a person usually didn't lose their house due to an unpaid credit card debt; until now This means many Australians will now be forced to consolidate their large credit card debt before being eligible for a home loan. ### The flow-on effects can include: - equity is stripped from your home when consolidating credit card debt to an existing mortgage - available funds for deposits are reduced by the increased credit card servicing requirements - amounts of previously *unsecured credit* are forced into being held as *secured credit*, and - reduced home loan affordability Many people will be caught unaware of the breadth of the real impact of the end of easy money. If you intend to help your kids with part of a deposit for their home loan, without a plan, your good intentions may be undone by the effect of the new credit card laws. ### When does this start? January 2019 with a full effect felt by about mid-year. ### How is this relevant to me or my children? The rude awakening for many Australians will be credit card debt will prevent many consumers from applying for a mortgage and will need to be *consolidated from credit card debts to personal loans* that when repaid, will then allow for a mortgage to be applied for. The devil is in the detail but in summary, this is the new risk to manage; - When an *unsecured debt* like a credit card goes unpaid, there is usually no underlying asset that can be seized by the bank - When this same debt is *secured by your home* and the debt goes unpaid, the underlying asset can be seized by the bank Now is not a time to be without your own financial adviser in your corner looking after you and your family. ### What to do? Take a closer look at your credit cards and begin to plan what you need to do in the future with mortgage debts and how to plan for that now. 1. **Learn** if you qualify for a mortgage *in your* current *position* including any credit cards and their limits 2. **Decided** if you want to convert those to personal loans to pay down and what impact that will have on your serviceability for a future home loan or small business mortgage. 3. **Plan** how you manage your credit card debt and the level and timeliness of their repayments 4. **Protect** your ability to continue to earn your income with income protection insurance. ### What's the one thing I need to know today? If you have a credit card, plan ahead if you're needing finance in the next 12-24 months. --- ### Frequently Asked Questions: Credit Cards & Borrowing Power #### What is the ASIC '3-Year Rule' for credit card debt? Introduced to curb persistent debt, the **3-year rule** requires lenders to verify that a customer can repay the *entire credit limit* (not just the balance) within three years. This shift in responsible lending means that high limits are now much harder to obtain, as the lender must assume you will max out the card and still be able to clear it. #### Why does my bank care about a credit card with a $0 balance? When you apply for a mortgage, lenders look at your **total credit limit** as a potential liability. They assume a monthly repayment of roughly **3% of that limit**. For example, a $15,000 unused credit limit is treated as a $450/month ongoing expense, which can significantly slash the amount you are allowed to borrow for a home. #### What is the danger of 'Securing' my credit card debt? A credit card is **unsecured debt**; if you can't pay, there is no asset for the bank to take. When you consolidate that debt into your mortgage, it becomes **secured debt**. You are effectively betting your home on your ability to repay old consumption. Furthermore, you turn a short-term debt into a 30-year debt, potentially paying more in total interest over the life of the loan. #### How can I 'clean up' my credit profile before a home loan? Start by **lowering your limits** to the minimum required for emergencies. Close any unused or 'legacy' accounts. If you have significant debt, consider converting it into a fixed-term personal loan with a clear end date. This shows the lender you are moving away from 'revolving' debt and provides a cleaner serviceability assessment. *Disclaimer: Credit laws and bank assessment rates are subject to change. For a strategic audit of your credit card limits and borrowing capacity, we recommend a [confidential consultation](https://sapience.com.au/contact).* **Do we sound like the type of people you'd like to do business with?** Call us today on 1300 137 403 or email us [here](https://sapience.com.au/index.php?Itemid=704) for a no-obligation private chat about your situation. --- ![author pic drew browne](https://sapience.com.au/images/author-pic/contact-drew-browne-advisor-sapience-financial.jpg)**Drew Browne** is a specialty Financial Risk Advisor working with Small Business Owners & their Families, Dual Income Professional Couples, and diverse families. He's an award-winning writer, speaker, financial adviser and business strategy mentor. His business Sapience Financial Group is committed to using business solutions for good in the community. In 2015 he was certified as a B Corp., and in 2017 was recognised in the inaugural Australian National Businesses of Tomorrow Awards. Today he advises Small Business Owners and their families, on how to protect themselves, from their businesses. He writes for successful Small Business Owners and Industry publications. You can read his Modern Small Business Leadership Blog [here](https://sapience.com.au/index.php?Itemid=1267). You can connect with him on [LinkedIn](https://www.linkedin.com/in/drewbrowne/). Any information provided is general advice only and we have not considered your personal circumstances. Before making any decision on the basis of this advice you should consider if the advice is appropriate for you based on your particular circumstance. ![Written by Human Not made by AI sapience financial ](https://sapience.com.au/images/icons/not-made-by-AI-sapience-financial-black.png) ## Schema ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BlogPosting", "@id": "https://sapience.com.au/blog/get-to-know-the-new-credit-card-laws#blogposting", "mainEntityOfPage": { "@type": "WebPage", "@id": "https://sapience.com.au/blog/get-to-know-the-new-credit-card-laws" }, "headline": "Australian Credit Card Laws: Impact on Mortgages & Borrowing Power", "description": "Understand the ASIC 3-year repayment rule and how credit card limits—not balances—affect your mortgage serviceability. Learn why unused credit is a liability in 2026.", "author": { "@type": "Person", "name": "Drew Browne", "jobTitle": "Thought Provocateur", "url": "https://sapience.com.au/about-us/drew-browne" }, "publisher": { "@type": "Organization", "name": "Sapience Financial", "logo": { "@type": "ImageObject", "url": "https://sapience.com.au/images/brand-logo/sapience-financial-h-logo.svg" } }, "datePublished": "2026-04-27", "dateModified": "2026-04-27" }, { "@type": "FAQPage", "mainEntity": [ { "@type": "Question", "name": "What is the '3-year rule' for Australian credit cards?", "acceptedAnswer": { "@type": "Answer", "text": "Under ASIC responsible lending rules, credit providers must assess whether a consumer can repay their full credit card limit within a three-year period. This prevents 'permanent debt' cycles and ensures that cards are used for short-term liquidity rather than long-term funding." } }, { "@type": "Question", "name": "How does my credit card limit affect my mortgage application?", "acceptedAnswer": { "@type": "Answer", "text": "Lenders assess your credit card limit, not your balance. Even if you pay your card off every month, a lender may assume a monthly repayment of roughly 3-4% of your total limit. A $10,000 limit could reduce your borrowing capacity by $40,000 or more." } }, { "@type": "Question", "name": "Should I consolidate my credit card debt into my home loan?", "acceptedAnswer": { "@type": "Answer", "text": "Consolidating unsecured credit card debt into a mortgage turns it into 'secured debt.' While it may lower your interest rate, it places your home at risk if you default. It also strips equity from your home to pay for past lifestyle consumption." } }, { "@type": "Question", "name": "Can I increase my borrowing power by lowering my credit card limit?", "acceptedAnswer": { "@type": "Answer", "text": "Yes. Reducing your credit card limit to the lowest possible level is one of the fastest ways to improve your mortgage serviceability. 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There's a new problem in your pocket.", "image": { "@type": "ImageObject", "url": "https://sapience.com.au/images/blog/intro-get-to-know-the-new-credit-card-laws-sapience-financial.jpg" }, "publisher": { "@type": "Organization", "name": "Sapience Financial", "logo": { "@type": "ImageObject", "url": "https://sapience.com.au/images/brand-logo/sapience-financial-square-logo.png" } }, "author": { "@type": "Person", "name": "Drew Browne", "url": "https://sapience.com.au/blog/get-to-know-the-new-credit-card-laws" }, "datePublished": "2019-02-10T08:59:55+11:00", "dateCreated": "2019-02-10T08:59:55+11:00", "dateModified": "2026-04-27T14:41:23+10:00" } ```