Banks’ $1.2bn credit card cash-in
03.11.10
Credit card interest rates are on the rise / File – Karen Collier, Herald Sun
MILLIONS of credit card customers will be whacked with another interest rate rise amid fears the global financial crisis is being used as an excuse to rort consumers.
The Commonwealth Bank and Westpac will slug card holders an extra .25 per cent from next week, in line with the Reserve Bank’s rise in official rates.
Major rivals are expected to quickly follow despite pleas for a reprieve for households battling to pay off bills.
InfoChoice chief Shaun Cornelius said customers across Australia were being charged an extra $1.2 billion a year because of a blowout between the cost of paying on plastic and the official cash rate since the financial crisis.
Those with no-frills cards have suffered most from the refusal of banks and other providers to fully pass on official cuts, only to jump on the rate rise bandwagon once the RBA moves up.
Mr Cornelius said the widening margins were costing customers an extra $110 a year on balances of $3000. Banks yesterday hit back, arguing credit cards were a far riskier form of lending than home loans, and that they still faced rising funding costs.
Westpac spokesman David Lording said credit card rates were more dependent on international conditions.
But Mr Cornelius said big banks were running out of excuses given improving economic conditions and ballooning profits, saying: “Bad debts are reducing and it’s becoming cheaper for the banks to borrow money. This seems to be a case of what goes up doesn’t go down.”
The InfoChoice study shows customers with low-rate credit cards were charged an average 12.75 per cent in January, 9 per cent above the Reserve Bank rate.
Tags: CBA, Credit Cards, Interest Rate, RBA, Westpac