Consumer advocacy group CHOICE is calling on the big four banks to pass on the latest interest rate cut to their credit card customers and end a sustained period of price gouging.
The call comes in the wake of CHOICE’s December consumer pulse survey which found lower income earners (39%), women (37%), those in regional areas (41%) and parents (40%) said they were unlikely to pay off their credit card bill in full after Christmas.
Despite the official cash rate falling 25 basis points to 2.25% today, ANZ, CBA, NAB and Westpac still charge around 20% p.a. interest on credit cards they offer. For example, CBA’s low fee credit card charges a 19.74% p.a. purchase rate and a 21.24% cash advance interest rate.
“The big banks will be making announcements about the impact of this rate change very soon. They’ll have a lot to answer for if, like they have many times before, they fail to pass on expected reductions to credit card customers,” says CHOICE Head of Media Tom Godfrey.
“When interests rates move it’s a good time to evaluate the financial products you have such as a home loan, credit credit or savings account to ensure you are getting the best deal available,” says Mr Godfrey.
“Consumers should not assume because they have been with one bank for a long time they will be rewarded for their loyality. Big financial institutions bank on the ‘lazy tax’ and the best way to combat that is to ask for a better deal or move your money,” says Mr Godfrey.
“With official interest rates at record lows, it’s staggering to think the big four banks are still punishing consumers with credit card interest rates in excess of 19% p.a.,” says Mr Godfrey.
CHOICE has long standing concerns that credit cards are overly complex and designed to distract consumers from very high interest rates by putting a focus on rewards schemes, interest-free periods, balance transfers and ‘low’ annual fees.
“The major banks’ ‘low-rate’ cards are worth considering, but with the most competitive of the lot only offering an interest rate of 13.24% p.a., but they are still a long way from the best deals on offer,” says Mr Godfrey.