Credit card users interest rates higher than before rate falls — RateCity
CREDIT card customers are being slugged with higher interest rates on plastic than they were before the nation’s series of rate falls.
Costs
Don't miss out on the headlines from Costs. Followed categories will be added to My News.
CREDIT card customers are being slugged with higher interest rates on plastic than they were before the nation’s series of rate falls.
The Reserve Bank of Australia began its trend of slashing rates in November 2011 which resulted in the cash rate plummeting from 4.75 per cent to 2.5 per cent.
But new data from comparison website RateCity shows some interest rates on cards have not gone down, instead they have climbed.
SAVE MONEY: More credit card news and tips
The highest credit card rate has gone up from 22.99 per cent to 23.5 per cent during this period.
But since the rate drops started the nation’s cash rate has fallen from 4.75 per cent to 2.5 per cent — a gradual decline of 2.25 per cent.
The data found the average credit card rate barely budged — it has fallen by just 0.37 per cent from 17.22 per cent to 16.85 per cent.
RateCity chief executive officer Alex Parsons said credit card interest rates remained excessive.
“The cash rate has almost halved (since November 2011) and credit card interest rates remain very high,’’ he said.
“It’s a tough one for those people who have a credit card debt.
“To people who are paying between 17 and 22 per cent on their credit card stop spending and move to a personal loan, the rates on these are around 10 per cent.’’
Latest RBA data shows Australians owe a massive $50.1 billion on credit cards and more than $35.1 billion is attracting interest.
The Australian Bankers’ Association’s chief executive Steven Munchenberg defended the interest rates on cards and said they were a risk to banks because they were a form of unsecured debt.
“Credit card interest rates are not related to the RBA cash rate and as a result it is not a valid comparison,’’ he said.
“Credit cards provide consumers with access to unsecured lending and therefore must be priced appropriately given this is riskier lending.”
The RBA is due to meet tomorrow and experts believe the cash rate will remain on hold.
Originally published as Credit card users interest rates higher than before rate falls — RateCity
‘Idiots!’: Bank’s brutal decision slammed
At the moment heartbroken Australians need their bank the most, a devastating reality is forced upon them - and people have had enough.
Council’s cruel stunt before 40% rate rise
One of Sydney’s largest councils faced a furious backlash after voting to raise rates by 40 per cent. But it’s what they did beforehand that has residents fuming.