by abrogating its Parliamentary Bestowed

Defined Terms and Documents

......by abrogating its Parliamentary Bestowed "extensive powers" to "...gather information from a payment system or from individual participants" by not requiring Credit Card Issuers to provide regular quantified financial reports to Australia's Principal Regulator of the Payments System that details the sources of Interest And Fees Revenue to ensure that -

(a) Financially Uneducated And Vulnerable Australians are not suffering Numeracy And Literacy Discrimination by being charged Material Interest And Fees at Usurious Unsecured Personal Loan Interest Rates; and

(b) Financially Educated are also contributing to the material cost of enjoying a Line Of Credit from Credit Cards

Re (b) above RBA's Consultation Document titled Executive Summary - Reform of Credit Card Schemes in Australia: RBA's "A Consultation Document" – December 2001 notes under point 6 of 'Introduction':

"Within the latter group, there is a third group which directly contributes very little to the costs of credit card schemes – these are the cardholders (known as ‘transactors’) who settle their credit card account in full each month. Although they normally pay an annual fee, they pay no transactions fees, enjoy the benefit of an interest-free period and in many cases earn loyalty points for each transaction...... 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."

The Writer's initial email to RBAInfo sent Tues, 25 Oct '11 titled "Seeking data on the percentage of credit card users who repay their outstanding indebtedness in a particular month, and a break-up of those who do not" included:

"After retiring from a 37 year career at CBA, where I dealt with former RBA colleagues in the late ‘70s at what was then known as Note Issue, I now spend part of my time pursuing causes with Govt and bureaucracy that I think have merit.
When I worked in CSB HO in the early ‘80s there was the “80/20 Rule” (Pareto’s Principle) where 80% of profit from savings accounts came from 20% of CBA’s customers. I suspect that a similar rule apples with credit cards.
Prima facie I see merit in adopting the American Express Card convention (may require amending the banking acts) to obligate all Credit Card Issuers in Australia to require all their credit card customers to repay their TOTAL outstanding debit balance monthly in arrears, because the banks and the more intelligent and well off credit card users are exploiting the less educated lower socio-economic users who pay hundreds of millions of dollars annually in exorbitant interest margin costs (well above the bank's cost of funds), whereupon the gap between the 'Haves' and the 'Have Notes' is further widening.
We are seeing a lot of recent evidence of the ‘Have Nots’ protesting with riots in England a few months ago and ‘Occupy Wall Street’ burgeoning into many large cities.
The primary benefit of holding a credit card should be to enable the user to purchase items without furnishing cash where their credit rating can be instantaneously checked by the merchant. It should not be for the less knowledgeable to be subsidising the more knowledgeable, which is presently the case.
I seek data for a particular month (or quarter) which shows:
1. Number of cards that repaid total indebtedness and dollar amount of those repayments.
2. Number of cards that repaid > or =50% of total indebtedness and dollar amount of those > or = 50% repayments.
3. Number of cards that repaid <50% but >5% of total indebtedness and dollar amount of those <50% but >5% repayments.
4. Number of cards that repaid <=5% of total indebtedness and dollar amount of those <=5% repayments.
If the RBA is unable to provide the above sought data or something similar, because the Banks do not report it to the RBA, would the RBA seek it from the major Credit Card Issuers as a one-off."

Sharon van Etten, Media & Public Relations Office, RBA email response to Philip Johnston sent Thurs, 10 Nov '11 included:

"Thank you for your enquiry about the proportion of credit card users who do not repay their outstanding balances in full and their demographic characteristics. I apologise for the delay in responding to you.

Information linking credit card repayments to demographic information is generally difficult to obtain. We are, however, able to provide some of the information you seek from our recently completed Consumer Payments Use Study (see http://www.rba.gov.au/publications/consultations/201106-strategic-review-innovation/pdf/201106-strategic-review-innovation-results.pdf). This study collected data on all payments made by a representative sample of Australian adults over a week-long period in late 2010. It also asked the respondents questions about their payments behaviour, including how often they made credit card repayments.

The study results indicate that around 47 per cent of Australian adults have a credit card. Age appears to play a role in credit card holding, with around 24 per cent of adults in the 18-29 age group holding a credit card, compared to around 58 per cent for adults aged 30-59 and 46 per cent for those aged 60 years or more.

Around 61 per cent of credit Cardholders pay off the closing balance of their credit card bill in full by the due date ‘every month’. At the other end of the spectrum, around one-quarter of credit Cardholders pay off their credit card in full ‘not very often’ or ‘hardly ever/never’. It is interesting to note that those credit Cardholders who make repayments in full less frequently also tend to make a smaller proportion of their total purchases using credit cards. For example, those who pay off their credit card in full ‘not very often’ or ‘hardly ever/never’ together make around 9 per cent of their purchases by credit card, whereas those who pay off their credit card in full ‘every month’ make around 23 per cent of their purchases by credit card. One possible explanation for this is that Cardholders who make less frequent repayments in full are avoiding additional interest charges by substituting other payment methods where they can. It is also possible that these Cardholders are limited in their ability to make additional purchases on their credit card because of credit limits.

Using demographic information on the survey respondents, we can also examine the characteristics of those respondents in the low-repayment categories of ‘not very often’ or ‘hardly ever/never’; for example, looking at the distribution by age and income we find:

· the majority of Cardholders in the low-repayment categories are middle aged: 28 per cent of Cardholders in the 30-39 and 40-49 age groups do not often pay off their monthly balance in full, compared to 11 per cent in the 18-29 age group and around 16 per cent in the 50-59 and 60-plus groups; and

· 26 per cent of Cardholders in the low-repayment categories earn personal annual income under $20 000, while 13 per cent have an annual income of $80 000 and above. The comparable shares for all survey respondents are 37 per cent and 10 per cent, respectively.

Another source of data that may be of interest to you is the Reserve Bank’s retail payment statistics, available at: http://www.rba.gov.au/payments-system/resources/statistics/index.html. In particular, Table 1, Credit and Charge Card Statistics, gives information on repayments, balances accruing interest and credit limits. These data can be used to shed light on the broad trends in credit card purchases and repayments. And you can find some commentary on these trends in the annual reports of the Payments System Board, available at: http://www.rba.gov.au/publications/annual-reports/psb/index.html.

Your email also raises a number of concerns about how credit card accounts are operated. The Payments System Board of the Reserve Bank has no regulatory power over these aspects of credit cards.

Read: Why does the Payments System Board of the Reserve Bank believe that it has no regulatory power to seek Credit Card Issuers to provide financial data which identify the demographic cohorts that contribute 80% circa of Interest And Penalty Fees Revenue?