Credit card interest hitting hard
(10 January 2012 – Australia) It was reported by the Sunday Herald Sun that banks took advantage of hard-pressed families by raising credit card interest as the Reserve Bank of Australia (RBA) was increasing its official cash rate.
This means credit card bills had blown out by hundreds of dollars as banks fail to pass on interest rate cuts to customers.
The analysis was done for the paper by RateCity and shows over the past five years banks have refused to lower rates when the cash rate had lowered.
The tactic is enabling banks to gouge 25 percent more interest from card holders, which equates to A$1.4 billion a year.
'Australians are paying much, much higher interest rates on credit cards than they should be,' RateCity chief executive Damian Smith said.
'Interest rates on just about every other financial product - home loans, savings accounts, term deposits - have come down since November, but credit cards rates haven't budged.'
About 2.2 million Australians who don't repay their card in full each month are coughing up more than A$600 in extra interest every year, which is propping up the banks' record profits.
Acting Treasurer Bill Shorten said the Government was 'very concerned' struggling families were being charged so much interest.
'We welcome this research,' he said. 'We shall continue to fight to cut costs for banking customers.'
The analysis was done for the paper by RateCity and shows over the past five years banks have refused to lower rates when the cash rate had lowered.
The tactic is enabling banks to gouge 25 percent more interest from card holders, which equates to A$1.4 billion a year.
'Australians are paying much, much higher interest rates on credit cards than they should be,' RateCity chief executive Damian Smith said.
'Interest rates on just about every other financial product - home loans, savings accounts, term deposits - have come down since November, but credit cards rates haven't budged.'
About 2.2 million Australians who don't repay their card in full each month are coughing up more than A$600 in extra interest every year, which is propping up the banks' record profits.
Acting Treasurer Bill Shorten said the Government was 'very concerned' struggling families were being charged so much interest.
'We welcome this research,' he said. 'We shall continue to fight to cut costs for banking customers.'
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