July 1st 2012 is best known for the introduction of the Carbon Tax. However, this was not the only change to the finance sector as new credit card reforms were also introduced.
As part of CHOICE’s Better Banking Campaign these credit card reforms are seen as a big win for consumers and a chance for many to make certain they are using the card that is best for them.
The changes effect both new and existing credit card holders and include the following;
As of 1 July 2012, your credit card company must:
- Refrain from offering you limit increases on your card, unless you agree to receive them.
- Provide monthly statements that show how long it will take to repay the entire balance if you only make minimum repayments.
- Provide clearer details on the ins and outs of interest-free periods.
All new credit cards must include:
- Standardised key fact sheets to make it much easier to compare offers.
- The capacity for consumers to nominate the credit limit.
- A ban on over-limit fees, unless you have agreed that your lender can charge you such fees.
- Notifications if you exceed your credit limit.
- Repayments to the most costly aspect of your credit card debt first (such as cash advances) to reduce your debt faster.
The three key reforms that do not apply to cards issued before 1 July 2012 are:
- a ban on over-limit fees (unless you have agreed to them)
- notification when you go over your credit limit, and
- directing repayments to the most expensive debt first.
NAB has applied all of these important reforms to existing cardholders, but other card providers are taking a piecemeal approach. St George and ANZ have elected only to direct repayment to the most expensive debt first. A CHOICE member has reported that CBA extended all of the new regulations when asked.
By contrast, 28 Degrees MasterCard is only including overlimit notifications and, worryingly, is also trying to encourage its customers to opt in to receive credit limits by advising that “not all customers are aware of when they are eligible to apply for a higher credit limit. If you’d like us to let you know, you’ll need to opt in to receive these invitations”.
In fact, 28 Degrees customers can apply for a credit limit increase through their online account access.
CHOICE offers a Compare, Ditch and Switch facility which they say “offers an unbiased comparison of card providers and to make sure you are getting the best out of your credit card.”