Credit card providers increase interest rates

Multiple lenders have pushed up their credit card interest rates hitting customers who fail to pay off their balance in full each month. SEE IF IT AFFECTS YOU.

Exclusive: Greedy lenders are slugging credit card customers by increasing interest rates, hitting those who fail to pay their card off in full each month.

St George Bank, Bank of Melbourne and BankSA — all subsidiaries of Westpac — are jacking up interest rates across 36 credit card deals pushing some card rates above 20 per cent.

They are increasing their variable purchase rates — the interest rate charged on day-to-day purchases — by 0.25 per cent.

This is a highly unusual move by lenders to increase card interest rates.

Analysis by financial comparison website RateCity has found this will cost a card customer who carries a $10,000 debt and fails to pay it off in full each month an additional $27 per year.

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Some financial institutions have increased their credit card interest rates.

RateCity spokeswoman Sally Tindall said the move should prompt customers to check what rate they are being charged and hunt for a better deal.

“It’s an interesting move, it could be a way of banks getting more profit in the door at a time when home loans are getting leaner and leaner,” she said.

“There’s no reason you should have a credit card rate above 10 per cent if you are paying interest.”

The nation’s credit card bill is massive — Reserve Bank of Australia statistics showed Australians owe $51.1 billion on plastic and more than $31.4 billion is accruing interest.

RateCity analysis also found the number of credit card accounts have fallen by 821,000 in the past year to 15.8 million.

Tribeca Financial’s chief executive officer Ryan Watson labelled credit cards a “scourge” and said hiking interest rates increased the nation’s debt problem.

Many credit card interest rates are under 10 per cent.

“The increasing of credit card interest rates should service as the impetus for people to seek alternative credit cards, which offer interest rates of 10 per cent or beyond and interest-free balance transfers,” he said.

“As a society Australians have become addicted to personal debt.

“We must break the cycle by first reducing the interest we pay on credit cards, then reduce their use to absolutely emergencies only.”

But a spokeswoman for St George, Bank of Melbourne and BankSA said the increases were a result of regularly reviewing their interest rates “including managing our risk across different product options.”

Cash advance rates has also been increased by 0.25 per cent to across all their products to 21.49 per cent.

Impacted customers have been notified via their credit card statements and the changes begin from April 9.

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If you have a credit card, check what rate you’re being charged and hunt for a better deal if you’re not satisfied. Picture: iStock.

Originally published as Credit card providers increase interest rates