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2007
No Rate Relief For Credit Card Users
The Age
Friday January 9, 2009
TWO-THIRDS of Australia's lenders are refusing to cut interest rates on credit cards despite the official cash rate falling four times in the past six months.
Financial research house Cannex found that most of the 270 credit cards it rated in its December review set interest rates between 17 and 20 per cent, compared with the official rate set by the Reserve Bank of 4.25 per cent.Westpac increased the rate on its no-annual-fee Mastercard from 17.5 per cent last July to 18.24 per cent this month despite official rates falling 3percentage points.Cannex senior analyst Harry Senlitonga said the credit crunch had seen defaults on card repayments soar and made it more difficult for banks to borrow money, meaning they were less inclined to pass on interest rate cuts.Analysts said the figures showed customers should avoid cards offering high-interest reward programs and opt for "no-frills", low-interest cards.Westpac senior economist Justin Smirk said banks had been quick to cut their mortgage rates, and rates for business loans were also starting to fall. But they had been less inclined to expose themselves further by cutting card rates.He said demand for cards remained strong, giving banks little incentive to offer rate cuts.Ian Gilbert, the acting chief executive of the Australian Bankers' Association, said home loan interest rates were lower because they could be secured against a property.
© 2009 The Age
