Aussie credit card customers ripped off $6.3 billion in savings as banks withhold rate cut Stuart Marsh • Senior Producer   Jun 10, 2020  smarsh@nine.com.au

Australia's leading consumer advocacy group is calling on Australia's banks to pass on rate cuts to credit card customers after analysis found $6.3 billion worth of savings were withheld.

New CHOICE data, calculated by financial comparison site Mozo, shows from June 2011 to April 2020 that banks kept $6.3 billion by not passing on Reserve Bank rate cuts.

The figure was reached by calculating the gap between the average consumer rate and the official cash rate, then multiplying the gap each month by the total interest accruing to balances on credit cards.

CHOICE CEO Alan Kirkland compared the withholding of rate cuts for credit card customers to theft.

"By failing to pass rate cuts on for credit cards, banks have effectively stolen $6.3 billion dollars from the pockets of Australians," said Mr Kirkland.

"While the cash rate has dropped from 4.75 per cent from 0.25 per cent since 2011, credit card rates have remained stubbornly high. Some banks - including ANZ, Bendigo, and St George -  have even increased rates on credit cards.

"This is disappointing behaviour from an industry looking to restore trust after the scandals of the Banking Royal Commission."

ANZ featured frequently in Mozo's highest credit card rate change list.

Mr Kirkland said credit card customers had missed out as much of the attention on rate cuts was placed on home loan customers.

"For many people, lower credit costs would have saved them from falling into a debt spiral and facing years of unnecessary hardship," says Mr Kirkland. 

"Banks have cut interest rates on mortgages as the cash rate has fallen. There's no justification for failing to do the same for other credit products, especially now so many Australians have lost their job."

CHOICE estimates credit card customers have missed out on $6.3 billion worth of savings.

The twelve cards with the biggest increase in interest rates since 2016 

Source: Mozo (19 May 2020)