Credit card interest rates climb hitting those with debts owing
Despite the RBA cash rate being at an all-time record low, banks have increased credit card interest rates for those who owe debt. SEE IF YOUR BANK IS INVOLVED
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Exclusive: Credit card interest rates have slowly crept up in 2019 slugging customers with higher charges if they fail to pay off their cards in full.
Some of the nation’s biggest banks — ANZ, Westpac and the Commonwealth Bank, and their subsidiary banks Bank of Melbourne, St George and BankSA — are among those who have increased interest rates this year on some products.
Standard credit card interest rates have climbed from 19.77 per cent in January to 19.94 per cent now, new analysis from financial comparison website RateCity found.
On a typical card debt of $4000 if the customers only paid the minimum amount each month on a rate of 19.94 per cent it would take them more than 40 years to pay off and cost more than $18,500.
The rate hikes comes despite the Reserve Bank of Australia dropping the cash rate twice this year — it now sits as a record low of 1 per cent.
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Crown Money Management’s chief executive officer Scott Parry said too many Australians failed to wipe their credit card debt each month and higher interest charges bite.
“Credit cards are huge profit spinners for the banks and consumers should be reviewing their deals,” he said.
“No one ever expects to get into credit card debt, they view it as an emergency fund but it’s exactly the opposite, it’s financial quicksand.”
Mr Parry urged those saddled with plastic debt to consider signing up to a balance-transfer deal where zero per cent honeymoon periods apply.
This allows customers to move their card debt across to the new card and wipe their debt much quicker during the no-interest period.
Latest RBA statistics found Australians continued to drown in plastic debt and owed a whopping $50.5 billion and $30.6 billion was accruing interest.
RateCity’s spokeswoman Sally Tindall said customers should be reviewing their cards to ensure they are not paying too much if they have a debt owing.
“This is a great time to review your credit card strategy,” she said.
“Lenders should tell you if they are going to push up their credit card rates, but if you get a letter in the mail saying your interest rate is going up see if you can swap cards.”
She said for those clearing their debt every month then they should not be concerned about the interest rate.
Meanwhile CBA is in the process of reducing annual fees on some of its credit cards.
Originally published as Credit card interest rates climb hitting those with debts owing
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