How banks are ripping off thousands of Aussies a year
Do you remember the last time your credit card rate went down?
With the standard interest rate on a credit card being 19.77 per cent, this number probably doesn’t seem so large as that’s the way it’s always been.
However, with the official cash rate being a measly 1.5 per cent, the gap between the rates is over 18 percentage points.
Graham Cooke, insights manager at Finder, told news.com.au that the credit card rate used to follow the official RBA cash rate.
“But that all went out the door from 2010 onwards,” Cooke said.
“If the banks had passed on the rate cuts as they have in the past, that would make the average standard rate today just 15 per cent.”
After inquiring with several banks, news.com.au couldn’t get an answer. According to Jason Murphy, who inquired why the rate hadn’t fallen, the best answer he could get was from an ANZ Bank spokesman who said:
“Credit cards were unsecured lending and “a completely different proposition to home loans and other secured lending”.
The spokesman then went on to explain that the RBA rate is “only one factor in determining our funding costs. The cash rate is linked to secured forms of lending.”
As rates aren’t looking to be lowered any time soon and are looking to increase, your credit card situation might seem a bit bleak.
There is something you can do though. Simply take a low fee, low interest rate card and make paying off your balance a priority. This way, you won’t be impacted by the high interest rate.