Two Effortless Changes to Credit Cards

Two Effortless Legislative Changes to Credit Cards

The RBA Board, and also the Payments Systems Board, recommending for 'public interest issues' to the Federal Govt, as required under Section 11(1) of the Reserve Bank Act 1959, to exercise their 'extensive powers' over the Credit Card Payment Schemes by setting new Standards, pursuant to Division 4, Section 18 to -

A.) regulate "a User Pays pricing to credit card payment services" because the RBA -

* published Reform of Credit Card Schemes in Aust: "A Consultation Document" – Dec 2001 that recommended "A movement towards a “user pays” approach to credit card payment services"; and

* received the Writer's CD submission to RBA sent 8 Dec 2011 that argued that banks profits from Credit Cards on the Retail Supply Side did not accord with the User Pays Principle because Credit Cardholders with poor Financial Literacy Capacity were paying the costs of Credit Cardholders with high Financial Literacy Capacity - the Writer's CD submission included Section 8 A) to H) to ensue that User Pays (evidenced in Persistent Revolvers);

and

B.) re-regulate a maximum interest rate for Credit Card Purchases and a maximum interest rate for Credit Card Cash Advances after Three Pivotal 'Landmark' RBA Published Papers in the last 26 years that recognised the increasing spread between the Overnight Cash Rate and Highest Credit Card Interest Rates because of the financial burden falling upon Persistent Revolvers that invariably possess low Financial Literacy Capacity and are perpetually paying Usurious Interest Rates. An Unconscionable 80% circa of all Interest And Penalty Fees Revenue levied by Credit Card Issuers annually is paid by Persistent Revolvers.

Re B.) above, below is an extract of Section 8 A) to H) of the Writer's CD Submission to the RBA dated 8 Dec 2011:

B)       "determine rules for participation in a payment system and set Standards for safety and efficiency, incl. issues such as performance benchmarks" by proceeding to implement "cost-based benchmarks" [akin to (I.), (II.) and (III.) in Section 2 [of this letter to the RBA] by -

            (a)        setting a regulatory cap for all the 330 different types of cards which fall under the jurisdiction of the RBA of -

                         i)        850 basis points above the RBA official interest rate (Overnight Cash Rate) as the maximum annual on-going interest rate charged by Credit Card Issuers in Australia for Purchases, where Credit Card Issuers can reach, but not exceed, this Purchase Interest Rate Cap;

                         ii)       950 basis points above the RBA official interest rate (Overnight Cash Rate) as the maximum annual on-going interest rate charged by Credit Card Issuers in Australia for Cash Advances, where Credit Card Issuers can reach, but not exceed, this Cash Advance Interest Rate Cap - refer 50% cap on cash advances in D) below; and

                         iii)      $90 for the maximum Annual Credit Card Fee that a Credit Card Issuer can charge (in 1993 restrictions on annual fees for credit cards were removed, so it is not unreasonable to introduce a cap, particularly as some cards charge inordinately high annual fees to provide 'inter alia' high loyalty points which surprisingly avoid income and FBT taxes. Why should a Credit Cardholder be entitled to claim as a tax deduction an annual fee of $395 to then earn 3 points for every dollar spent and not pay income tax on that earning?