Victoria’s Government is calling on the Federal Government and Australia’s major banks to review credit card interest rates amid growing concerns they are excessive and out-of-step with other interest rates.
The state’s treasurer Tim Pallas was today (Sunday) joined by Finance Sector Union State Secretary, Nicole McPherson, in a call to act now to ensure consumers are not exposed to an unreasonable or unfair financial burden from high credit card rates.
It follows a letter by the state’s Labor Government to Federal Treasurer Josh Frydenberg and the CEOs of National Australia Bank, ANZ, Commonwealth, Westpac, Bendigo, Bank of Queensland and Macquarie banks seeking an urgent review.
Some card rates are more than 20 percent
In a recent Senate Standing Committee on Economics Legislation hearing, the Governor of the Reserve Bank, Dr Philip Lowe, expressed frustration that some credit cards continue to charge interest rates upwards of 20 percent, despite the Reserve Bank’s cash rate falling to only 0.1 percent.
In a statement from Minister Pallas’ office, the Victorian Government said it is asking the Commonwealth to investigate the option of mandating a maximum margin between credit card interest rates and the cash rate.
This could be implemented in a similar fashion to the current maximum interest rate which applies for all credit contracts that fall under the National Consumer Credit Protection Act 2009.
Unreasonable financial burden on consumers
“Our banking leaders and the Federal Government must act to ensure consumers are not exposed to an unreasonable or unfair financial burden from high credit card rates,” Pallas stated.
In her comments, the Finance Sector Union’s McPherson said: “It really is open slather when it comes to the credit card market, where interest rates fail to reflect the cash rate.
“[Our] members are experiencing an increased focus by banks on selling these high-margin products – this can lead to a tragic cycle of spiralling debt for the customer, and stress and pressure on Finance Sector Union members.”