Unsolicited credit letters under fire

A new report has taken aim at unsolicited letters from banks, retailers and other lenders offering pre-approved higher limits on credit cards.

The report commissioned by the Consumer Action Law Centre says lenders are using psychological manipulation to encourage people to take on more debt.

The centre's Nicole Rich says the letters increase the chances that people will accept the higher limits.

"What these letters do is they use positive messages about how good it will be on a rainy day and how special you are as a customer to get the offer," she said.

"And they try not to use the word debt because that brings home what you're actually doing, which is potentially taking on much more debt."

Ms Rich says lenders are relying on loopholes in the law to send out unsolicited material.

"The problem is they then say that nothing should be done about it because they warned customers and all that customers need is more information so they can make their own decisions about these things," she said.

"At the same time they are using psychological manipulation that deliberately tries to make it more likely you will take up this debt even if it's not in your best interests."