"It upsets me when we have the problem of easy credit, and at the same time that this is going on the banks are virtually thumbing their nose at the situation," Mr Watson says.
But credit offers including mortgage top-ups for those special purchases hit "valued" customers' letter boxes thick and fast from the big banks seeking to satisfy an insatiable appetite for consumer and housing debt.
"Bank staff want to be rewarded for good service, rather than for selling ever-increasing levels of debt," bank workers union spokesman Andrew Campbell says.
Westpac call centre staff must offer a credit card or permanent overdraft application to customers who ring asking for a temporary overdraft, he says.
Call centre staff estimate that most requests for a temporary overdraft come from beneficiaries effectively looking for an advance on their next benefit payment, Mr Campbell says.
Westpac spokesman Mark Watts says outstanding overdraft balances have declined by 8 per cent in the past year. "So there is no concerted push, there is no conspiracy."
"There is a subtle difference," Mr Russell says. "There needs to be an understanding of the disparate bargaining strength between a bank and an individual. They need to exercise some restraint in the exercise of their power. That is a social responsibility."
Bank of New Zealand was criticised for offering pre-approved credit cards en masse to non-customers, including to a large number of beneficiaries and people with poor credit ratings, immediately before Christmas 2005.
But their behaviour can be somewhat changeable, aggressively pushing credit card spending to generate more income, and at the same time offering options to reduce credit card debt and avoid horrendous interest costs, Mr Tripe says.
A rise in the amount owing on the plastic that is not attracting interest is increasing, while interest-bearing balances have remained steady in the past year. "People are using their card as a convenience to a greater extent, rather than using it as a means of borrowing," Mr Tripe says.
The banks acknowledge they have a role to play in ensuring consumers do not get in over their heads with debt. They point to their support for financial literacy programmes as proof that they take customer debt management seriously.
ANZ's retail bank managing director, Wayne Besant, says the bank has a responsibility to ensure customers are aware of personal financial situation, and of their ability to repay debt.
"The last thing we want to do is have our customers go into debt situations that they can't service." Mr Watts says. "It is the right thing to do, and it is good business. It is not sustainable to have your customers unable to cope or meet their financial commitments."
New Zealanders actually have a remarkably small proportion of non-housing debt, with the amount racked up on credit cards and other consumer finance totalling less than $10 billion, compared with $130 billion of total household debt, he says.
The average net worth of households increased $26,600 last year to $352,200. The rate of bankruptcies in New Zealand, though at an eight-year high, is much lower than in many other Western countries.
The Reserve Bank's main concern is around banks easing their minimum lending criteria, which has resulted in homebuyers borrowing up to 100 per cent of a property's value, doing away with the need for a deposit, normally about 20 per cent.
Such mortgages have previously been the domain of second-tier lenders such as finance companies, targeting borrowers who do not meet banks' lending criteria. The need to maintain and grow market share has forced banks to start competing for a slice of that business.
In an attempt to dampen the housing market, Reserve Bank governor Allan Bollard raised official interest rates last month another 25 basis point to 7.5 per cent, but it is proving to be a blunt instrument.
"Quite frankly it wouldn't make a lot of difference whether our interest rates were 5, 7, or 9 per cent, because the margin is so substantial that it is relatively unimportant," Mr Tripe says.
Dr Bollard summoned bank bosses to his office to discuss the issue and has threatened to curb their ability to lend if they do not heed his warnings to moderate their lending behaviour.
An option is to require banks to hold more money in reserve, which would reduce the amount available to lend out, driving up interest rates and reducing borrower demand. Banks appeared to respond by lifting two-year fixed rates which have shot up to 8.9 per cent.
Mr Tripe says it is not up to banks to cool the housing market. "Their job is to make loans on which they believe they have got a very high probability of being repaid."
Banks could not abandon all appearance of social responsibility. "But they aren't there to be charities, to be at the Reserve Bank's beck and call every minute. If people take on too much debt, the people with the problem are the banks."
At the Consumers Institute Mr Russell says that though the banks are a facilitator of debt, there also has to be a degree of personal responsibility.
"If you are regularly getting close to your limit and only paying off the interest, then you are the perfect customer for the bank and they will incrementally offer you a little bit more and a little bit more."
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