Tuesday, 9 August 2022

    Banks under fire

    The head of the consumer watchdog says Australians deserve an explanation about why banks are charging exorbitant credit card interest rates, The New Daily reports.

    There’s growing concern consumers are being gouged by credit card rates in excess of 20 per cent, despite record low lending costs.

    ACCC chair Rod Sims told The New Daily consumers deserve to know why those rates are so high, despite the RBA’s interest rate sitting at 0.1 per cent.

    “It’s certainly an issue where you’ve got interest rates being charged at about 20 per cent and of course the cash rate is much closer to 1 per cent,” Mr Sims said.

    Banks are facing mounting scrutiny over credit card rates ahead of new ASIC rules coming into force and calls from advocates for an ACCC probe.

    Last week, ANZ CEO Shayne Elliott defended an aggressive marketing campaign for a 20.24 per cent interest rate card in an appearance before the House Economics Committee.

    ANZ is offering an annual fee waiver and a $800 gift card bonus on signing up, raising questions about whether it is locking customers into high fees before a crackdown on credit products comes into force in October.

    The new design and distribution obligations will limit how banks can target products by requiring them to determine the needs of consumers.

    Labor MP Andrew Leigh asked Mr Elliot whether he is “embarrassed” by the card, which advocates warn would fall afoul of the new rules.

    “Twenty per cent is taking you into the world of payday lenders and loan sharks, not the world in which an esteemed major bank should be operating,” Dr Leigh said.

    But the bank boss denied ANZ was trying to lock in customers, noting that 50 per cent of customers (on average) typically don’t pay interest.


    ‘Embarrassing’: Australian banks under pressure over high credit card interest rates (The New Daily)