Card customers are gouged, say MPs

LNP MP Scott Buchholz has accused the Commonwealth Bank of ‘gouging’ its customers.

Liberal National Party MP Scott Buchholz has accused the Commonwealth of “gouging” its customers by applying interest rates of more than 21 per cent on credit cards, challenging the bank to think about cutting the charges to help customers.

Mr Buchholz asked CBA chief Ian Narev to justify the high rates in light of his bank’s claims to fairness, while Liberal colleague Craig Kelly sought an end to penalty fees applied to late card payments.

“To me, that’s gouging, that’s excessive,” Mr Buchholz said of the 21 per cent interest rate on cash advances on a credit card. “How is that fair?”

Mr Narev told the House of Representatives committee that the credit card rates reflected the risky nature of the debts compared with secure loans like mortgages.

“At a point in the cycle at which all of a sudden the economy turns down, the first thing you would experience losses on is credit cards and personal loans — and they can come very quickly,” Mr Narev said.

“Over a cycle this is by some degree the riskiest debt that we have. There are opportunities to have the particular need for that debt met at much lower costs.”

Customers could switch to a personal loan, he said.

Mr Narev also rebuffed Mr Kelly’s criticism of the banks for charging late fees — a practice that was put to the test in the High Court earlier this year, when ANZ defeated a claim that fees of $35 for late payments on credit cards amounted to unconscionable conduct.