Defined Terms and Documents  

Usurious Unsecured Personal Loan Interest Rates Charged On Many Credit Cards or Usurious Unsecured Personal Loan Interest Rates or Usurious Interest Rates means an interest rate that is considered to be excessive compared to prevailing market interest rates.

The Executive Summary - Reform of Credit Card Schemes in Australia: RBA's "A Consultation Document" – Dec 2001 notes that -

 I.         "...One group are those cardholders who use the revolving line of credit, who pay interest rates significantly above rates on other forms of unsecured lending."  (".....who use the revolving line of credit refers to Credit Cardholders who do not repay their Closing Balance by the Payment Due Date, but rather carry a large Outstanding Indebtedness at around 20% p.a. interest rate.)

II.         "Nor is it surprising that banks and other deposit-taking institutions are promoting most actively the credit card because it is the payment instrument for which they receive the highest return"

III.        "This regulatory structure is unique in Australia; a comparable set of restrictions (in Australia) has not been permitted in any other market without authorisation under the Trade Practices Act 1974." (This highlights the ''extensive powers'' that the Reserve Bank possess, but has not deployed to identify which Credit Cardholders are paying the vast bulk of Interest And Penalty Fees Revenue by asking the 13 Questions.)

Chapter 5. notes The spread between the wholesale cost of funds and Credit Card interest rates has widened and widened:

As at March 2017, the highest -

*     Purchase interest rate was 25.9% from "Lombard Visa Card Classic"

*     Cash Advance interest rate was 29.49% from G.E. Money's "Go MasterCard".

Latitude Financial's Go MasterCard had a Cash Advance interest rate of 29.49% until March 2019.  Presently it is 25.9%, but now incorporates a Cash Advance Fee of $3 or 3% of the cash advance, whichever is greater = 28.9%.  Latitude charges an explicit 'Late fee' of $35.  $8.95 monthly account service fee when outstanding balance is greater than $10. 
Little wonder that Credit Cardholders with low Financial Literacy get lured into applying for a Latitude Financial GO Mastercard because of deceptively offering 'Enjoy now. Pay later. Interest Free'.

Australia’s most predatory credit cards revealed - The New Daily -  Feb 11, 2015

Highest Interest Rate Credit Cards

1.      Interest & Fees on Unsecured Personal Loans are cheaper from the Four Pillars 'et al'  than borrowing on a 'standard rate' Credit Card

Unsecured Personal Loans explains that the Four Pillars:

(A)        Offer variable (floating) rate unsecured personal loans for as small as $5,000 and at least up to $50,000 for as short as 12 months up to 7 years at between 12.99% (plus a $150 'Establishment Fee' and a $10 'Monthly Service Fee' which equates to a total interest and fees cost for Westpac of approx 14%pa., referred to as the Comparison Rate) and 14.69% from ANZ, plus a $30 'Quarterly Loan Administration Charge'.  Interest is calculated on the 'Outstanding Loan Owing' (not the 'Initial Loan Amount') for the term of the variable rate personal loan.

(B)       Charge a Late Payment Fee of around $20 if a scheduled repayment (eg each fortnight or each month) is received more than 5 business days late.

The Four Pillars offer Credit Card Products which charge up to -

*          20% on Purchases after expiry of an Interest Free Period which may be up to 55 days from the 'Purchase Date'; and

*          22% on Cash Advances where interest is charged from the date of the Cash Advance, with some also charging an explicit one-off 'Cash Advance Fee' up to $5.

"There is significant variation in the advertised rates on credit card debt, reflecting the wide range of products offered, but some bunching of standard cards around 20 per cent and
around 13 per cent for lower-rate cards (Graph 14)."

The cost of borrowing money using a Credit Card is up to 7% higher than if taking out an Unsecured Personal Loan if the 'Borrower' under an Unsecured Personal Loan adheres to the published 'Repayment Schedule'. 

Naturally, a loan's officer will need to be satisfied about collateral and/or assets, prior to granting an applicant an Unsecured Personal Loan.  However, a Credit Card Issuer is supposed to satisfy similar disciplines prior to issuing a Credit Card to an applicant.

This up to 7% 'Premium' above the market rate for an Unsecured Personal Loan charged on many Cash Advances is Unconscionable Conduct (as defined by the ACCC) and represents a usury (exorbitant) additional financial impost principally contributed to Credit Card Issuers by Financially Uneducated And Vulnerable Australians.

Citibank's Late Payment Fee of $10 is "Charged when the Total Minimum Payment Due is not paid by Payment Due Date and every 7 days thereafter until the Total Minimum Payment Due is made.

Some Credit Cards charge a fee if the Credit Cardholder exceeds their Card Limit, hereinafter referred to as a OverLimit Fee for accounts opened before 1 July 2012.

Late Payment Fees and Overlimit Fees are well above the Credit Card Issuer's marginal costs.

2.       Lowest Interest Rate Purchase & Cash Advance Credit Cards lists 3 different Credit Card Products from each of Mozo's Best Low Rate Credit Card 2013 and the AFR's Smart Investor - Blue Ribbon Awards 2013: The Winners that are materially cheaper than in 1. above. 

          Five of these six Credit Card Products -

•  charge the same interest rate on both Purchases and Cash Advances which are between 8.99% and 11.95%;

•  levy an annual fee between Nil and $40; and

•  provide up to 55 days interest free on Purchases, provided the full Outstanding Indebtedness is repaid by the Payment Due Date.

SMH's listing on 6 May '15 of low interest personal loans notes 'People's Choice Credit Union' and 'RateSetter' offering unsecured personal loans at low interest rates. 

Low Interest Rate Credit Cards - at March 2017 - lists three Credit Card Issuers' Credit Cards between 8.99% and 11.95% for both Purchases and Cash Advances with a low annual fee.

3.     Margin Between Average Business Card Purchase Interest Rate And Official Cash Rate Increased from 8.07% (as at 1 June 2007) to 13.48% (as at 1 June 2014).  In 7½ years, the RBA lowered Credit Card Issuers cost of funds, namely the Cash Rate dropped from 6.75% to 1.5%.  Yet the RBA has not sought Credit Card Issuers to pass on any of its considerable 'funding costs' savings to Credit Cardholders.

        In Nov 2007 the official cash rate was 6.50% and the average credit card interest rate was 14.51%.  In April 2015 the official cash rate was 2.25% and the average credit card interest rate was 17.01%.

Empirical evidence establishes that interest rates and fees charged on the vast majority of Credit Card Products are usurious when compared with interest rates and fees applicable in 1. and 2. above.

The Payment Systems (Regulation) Act 1998 gives the RBA "extensive powers" to "...gather information from a payment system or from individual participants." which includes Credit Card Issuers due to Reserve Bank bringing credit card schemes in Australia under its regulatory oversight as announced in Media Release 12 April 2001 -  Designation of Credit Card Schemes in Australia which informs that "Designation is the first step in establishing standards and access regimes for a payment system to deal with public interest issues." - "Designation of a payment system occurs only after substantial consultation with participants and after voluntary arrangements have been exhausted."

Reasons for the Decision to Designate the EFTPOS Payment System announces that the RBA brought the EFTPOS Payments system under its regulatory control in Oct. 2004.

Read:

How a USA Supreme Court ruling killed off usury laws for credit card rates

Why Can Credit Card Companies Charge Such High Interest Rates?

South Dakota a Favorite State for Credit Card Companies

Study on interest rate restrictions in the EU