An Australian man was left stunned after he was refused pre-approval for a home loan because he owed less than $2 on an old credit card.
Sam, who stopped using his Citibank card in 2023, accidentally left $1.50 in debt.
The tiny sum grew as two cents were added each month due to interest and other fees.
The small amount caused his pre-approval to be denied, meaning he lost the opportunity to purchase the property he wanted.
NAB, which acquired Citibank in 2022, apologized to Sam and admitted that the credit card account should have been closed.
Australian man left stunned after being refused pre-approval for a home loan because he owed less than $2 on an old credit card (file image)
NAB executive Alan Machet told Daily Mail Australia the mistake was an “oversight”.
“It’s clear we weren’t at our best here and we apologize,” he said.
‘By the time the customer had practically paid off the credit card balance, we should have closed the account.
“The fact that that did not happen was an oversight and has caused unnecessary distress to the customer and, again, we are sorry that this has happened.”
Machet confirmed that the bank is in the process of restoring Sam’s credit file and will ensure he receives further support if necessary.
Sam said he was pleased with the outcome after the bank resolved the issue quickly.
The Financial Rights Law Center (FRLC), which provides legal advice on a variety of financial matters, helped Sam during his dilemma.
Julia Davis, senior director of policy and communications at FRLC, said she did not know she owed the bank anything and was harshly critical of the banking system in Australia.
NAB claimed bank statements were sent to Sam informing him he owed money on the credit card.
NAB, which acquired Citibank in June 2022, apologized to Sam and admitted the credit card account should have been closed (file image)
“First of all, Sam really should have received a notice when late payments were reported on his credit report,” he said. 7news.
“Under our current rules, banks have no obligation to contact a customer when late payments are reported on their credit file, even when they might otherwise have a perfect history.”
A default listing is issued to a customer if their credit card debt reaches $150 or more and has not been paid within 60 days.
Customers will have their payment history on their credit report for two years.
They are urged to pay any interest or fees, such as monthly or annual account maintenance fees, before canceling their credit cards.
In February, the federal government ordered an independent review of the credit reporting framework used in Australia’s banking system.
The review will explore the effectiveness of credit reporting provisions under the Privacy Act (1986) and the National Consumer Credit Protection Act (2009).
