Credit Card Interest Rates
For the most of 2008 big banks have been urged by consumer groups to pass the reductions to cut interest rates on credit cards. For too long now the unparalleled cuts by the RBA have not been passed on to the Australian credit card user. As of yesterday the big four banks are set to review their credit card interest rates Nicole Rich, of the Consumer Action Law Centre, said there was no reason for the high rates on credit cards, the Herald Sun reports. “Of course, credit card rates are higher than home loan rates to reflect a higher risk, but there is no excuse for rates to be as high as they are,” Ms Rich said. “People are trying to pay down their debt as much as possible, but higher interest rates are making it hard for those who are really struggling.”
“The gap between the home loan rate and the credit card rate has probably never been wider, and that equals profit for the banks and the card companies,” he said. “We would call on banks and non-banks to reduce rates, given that there is a record $46 billion currently outstanding on credit cards.”
Westpac will reduce interest rates on Altitude, Altitude Business and 55-day credit cards by the full percentage point, effective next Thursday. NAB will also lower interest rates on its reward cards (Qantas, Velocity and Mini) and commercial cards (Business Access, Business Card and Business Velocity) by one percentage point later this month. A NAB spokeswoman said other credit cards were still being reviewed.
Though the big four banks have passed on the full cut to mortgage rates, they warn they may not do so in future. The banks say high costs in wholesale markets will make it harder to fully pass on RBA cuts. “We continue to look for ways to pass on savings to our customers, particularly during these economically turbulent times,” NAB retail banking general manager Lisa Gray said yesterday. “It is important to acknowledge, however, these latest rate cuts have come at a time when our funding costs are at very high levels and we may not be in a position to pass on full rate cuts in the future.”
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