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Date Published : Thursday, May 01, 2008
Interest rates charged on credit card accounts, personal loans and mortgages may be even higher if banks are forced to cut consumer penalty fees, according to a major industry association.
Currently, the federal government is reviewing the way banks impose charges on to customers if they get overdrawn, with many charging up to $50 for an unofficial overdraft and up to $35 for late payments on credit cards.
However, according to the Australian Bankers Association, banks may threaten to put other chares up - such as interest rates on loans - in order to recoup the lost income.
The Herald Sun reports that the federal government inquiry is examining a bill by Family First senator Steve Fielding, which proposes restricting penalty fees to basic cost recovery - similar to a recent High Court ruling in the UK.
Senator Fielding said: "[The banks] are holding the lowest-income earners to ransom. I don't believe people are sitting deliberately at home trying to frustrate the banks.
"And for banks to be profiteering, especially when people are really feeling the pinch from higher interest rates, it's just outrageous."
Recently, three of the country's major banks increased interest rates charged on its variable rate home loans as a result of the credit crunch - despite any federal government ruling on bank charges being months away.
ANZ, National Australia Bank and Westpac all increased rates ahead of the May base rate decision by the Reserve Bank.
Compare credit card rates.
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