Credit cards interest rates predicted to rise
12 March 2010
Credit cards providers and banks have come under fire for their prompt action in rising credit cards interest rates after the official rates rose by the Reserve bank in recent days, especially when compared to their inaction in lowering rates over recent years.
According to recent news reports, Australian banks have used the last two years to increase the margins they earn on credit cards, despite following the RBA's lead in other areas of financing. In the world of credit cards, most rate cuts by the central bank were ignored with additional rate rises issued despite the global economic conditions.
Figures were listed as follows when comparing the RBA and average banks rates on low and standard rate credit cards:
- RBA official rates are 3.5 per cent lower than before the global financial crisis
- Average banks rates are 0.5 per cent lower than before the global financial crisis
There is now also talk that credit card users will soon experience another rise in interest rates after news that both the Commonwealth Bank and Westpac are intending to raise their rates by 0.25 per cent with other providers expected to follow the trend.
The banks have defended this rise by saying that credit cards rates were affected by international conditions and therefore cannot be regarded in the same light at other interest rates, while also being a riskier way of lending money with more security needed.
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