AFCA received over 100K complaints last year. I was one of them

Over a period of 8 weeks, I received 11 offers to take out a cash advance from my credit card. I thought that was predatory, so I complained – here's what happened next.

I understand that banks are going to market to you. But 11 times in less than 2 months?

That's more than one a week!

As a result, when my inbox got flooded with cash advance offers, I became one of the 100,000 people who lodged a complaint to the Australian Financial Complaints Authority (AFCA) in 2023.

Let me explain why…

Cashing in on the cost of living crisis

The first offer came, and I accepted it. I withdrew $2,500 as a cash advance on the credit card at 1.99%, and I put that money in my savings account, which was paying 5% interest. The numbers looked something like this:

• Cash advance of $2,500
• Charged interest at 1.99% for 12 months – this was charged upfront at a cost of $49.75
• Added that money to my savings account, then earning 5% (now 5.4%)
• Earned interest at a rate of 5% for 12 months – total of $125
• So I ended up ahead by $75 ($125 interest earned, minus $49.75 upfront cost), and I also got a $200 JB HiFi voucher for my effort.

I definitely scored the better end of this deal. In fact, I probably should have withdrawn more in the cash advance and made even more money!

The credit card company is obviously hoping I won't repay the debt in time and I'll have to pay 20% interest on the remaining balance, but I'm on a payment plan to avoid that happening.

So if I ended up winning, why am I complaining?

Textbook predatory lenders

It's because I believe the way they have aggressively marketed these offers is textbook predatory behaviour.

I'll be okay – I accepted the first offer then ignored the next 10, and I can comfortably afford to repay them in time.

But after accepting that first offer, they still came back to me 10 more times, enticing me to take out more. For others receiving these offers, they may not stop at one cash advance.

Every offer came with a different incentive: first it was a $200 gift card, then they offered $150 cashback credited to the card. Then it was a different $150 gift card.

All of the offers had a similar angle. Take out a cash advance of up to 90% of your credit limit at a low interest rate (which reverts to a much higher rate in six-12 months), and we'll give you this bonus.

The not-so-silver lining

If I had accepted more of their offers, I could have ended up with ten of thousands of dollars worth of unsecured debt. If you don't repay them in the specified period, that's a really easy way to end up with a pile of high-interest bad debt, a big minimum payment each month and a world of financial trouble.

This is the type of predatory behaviour from lenders that regulators are trying to stamp out, but it doesn't appear to be working. AFCA hit a new peak of complaints with 100,000 received in 2023, and they're urging banks and providers to "do a better job of handling complaints within their own internal complaints processes, so only the most complex cases reach AFCA".

As someone who has complained to my bank, I agree.

I called my lender, explaining all of the above, and their solution was to say "we'll remove you from our marketing database".

I said, "sure, great… but also, how about you stop marketing unsecured credit so aggressively to your customers during a cost of living crisis?!"

That fell on deaf ears, so I complained to AFCA.

At Finder, we dug into the details a little more and discovered Australia's five most complained-about financial products in 2023:

I didn't get anywhere with my complaint with either my bank or AFCA, so I'm taking the only action I can: I'm going to stop being a customer, and shop around for a new credit card. When we're not happy with the service or product we're getting, sometimes taking our business elsewhere is the best resolution.