Bring card providers to account over high interest: inquiry
CREDIT card providers should be brought to account when they fail to pass on interest rate falls to consumers, a national financial hardship group argues.
The gap between the Reserve Bank's official cash rate and credit card rates often reaches 20% and also needs to be urgently addressed, Good Shepherd will tell a Senate inquiry today.
The group, which provides financial counselling to disadvantaged women, argues in its submission that the growing disparity between the cash rate and credit card rate indicates consumers are being "short-changed" and card providers are pocketing the benefits.
"The average margin on credit cards is now as high as 16%, up from 7% in 2007-08. Money sourced at 3% (interest) is being lent out at 19%," the submission reads.
That disparity meant consumers faced higher charges than necessary "and hence a higher likelihood of experiencing financial hardship".
Good Shepherd also argues high credit card rates will slow any potential economic stimulus package as consumers will still be paying off debt.
In last week's Senate inquiry hearing, consumer advocates said low-income consumers were being trapped by high-interest cards linked to white-goods purchased on 18-month to two-year, interest-free deals.
The inquiry is due to report in November.