Banks Fail To Pass On Interest Rates Cuts To Australian Credit Card Borrowers

Post by NeilMc on March 11, 2010 · Under Australian Economy, Business News, banking, credit cards, interest rates · Comment

New data analysing the movement in credit card interest rates over the last two years shows that Australian bank’s have been the main beneficiaries of interest rate cuts, having kept 85 per cent of the savings resulting from the central bank easing interest rates.

Despite lenders passing on the majority of interest rate cuts to their mortgage borrowers, data suggests that the big four lenders kept an average of 85 per cent of the net gains in interest rate movements, instead of passing those savings on to their credit card borrowers.

In spite of the fact that the Reserve Bank of Australia cut interest rates by 350 basis points, a comparison of credit card interest rate movements show that standard and low rate credit cards saw their interest rates cuts by an average of just 50 basis points.

ANZ, Westpac, and CBA cut their credit card rates 50, 51 and 25 basis points respectively.

By March 1, the interest rates charged by the three stood at 18.24 per cent, 18.59 per cent, and 19.74 per cent respectively.

NAB was the worst offender, and after promising its customers that it would engage in “more give, less take”, actually charges more interest on credit card debt than it did two years ago.

NAB credit card borrowers face an overall rise of 0.14 per cent on its standard credit card debt.

NAB credit card borrowers pay an interest rate of 18.74 per cent today, compared with 18.6 per cent two years ago. NAB raised interest rates on credit cards by 85 basis points during the December 2009 quarter.

By March 1 the three other major banks charged 12.49 per cent on standard credit card debt.

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