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$6.3 billion stolen from the pockets of Australians by banks: CHOICE

Failure to pass interest rate cuts to credit card customers by the likes of ANZ, St George and Bendigo Bank has cost households $6.3 billion.

New analysis has found Australian banks have pocketed $6.3 billion* over the last decade by failing to pass rate cuts onto credit card customers.

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

"While the cash rate has dropped from 4.75% from 0.25% 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," says Mr Kirkland. 

"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 is also warning Australians about the banks that have lifted credit card rates up as their costs have gone down.
 

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Infographic available for embedding here: https://infogram.com/banking-campaign-top-12-cards-with-the-biggest-interest-rate-increase-1h8n6mdnvz196xo?live

"If you're unimpressed with the interest rate your bank is charging, you should vote with your feet. Cancel your current credit card and switch to a bank with a lower-rate card. This will send the loudest message to the banks that they need to treat their customers fairly," says Mr Kirkland.

CHOICE's Make Banking Fair campaign continues with the consumer advocate today launching a crowdfunding campaign to fund a national advertising campaign calling on banks to do better. Australians can join the campaign here.

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

Provider name

Name

Rate at 1 April 2016

Rate at 19 May 2020

Change

Coles

Low Rate MasterCard

9.99

12.99

3.00

ME

frank Credit Card

9.99

11.99

2.00

Police Credit Union

Extralite Credit Card

11.99

13.99

2.00

ANZ

Rewards

18.79

20.24

1.45

ANZ

Rewards Black

18.79

20.24

1.45

ANZ

Rewards Platinum

18.79

20.24

1.45

Australian Military Bank

Low Rate Visa Credit Card

10.99

11.99

1.00

Bendigo Bank

Platinum

18.99

19.99

1.00

Bank of Melbourne

Vertigo

13.24

13.99

0.75

BankSA

Vertigo

13.24

13.99

0.75

Citi

Prestige

20.74

21.49

0.75

St.George

Vertigo

13.24

13.99

0.75

Source: Mozo (19 May 2020)

Media contact: Katelyn Cameron, media@choice.com.au, 0430 172 669

*Mozo's data methodology: 
-To calculate the $6.3 billion in savings, Mozo found the average credit card purchase rate for each month from June 2011 to April 2020 and calculated how much the gap between that average rate and the RBA's Cash Rate changed each month. Then, for each month, Mozo multiplied that gap by the total interest accruing to balances on credit cards according to the RBA, and added each monthly figure to arrive at a total.
- To identify the cards with the largest rate increases, Mozo compared the purchase rate for each card at 1 April 2016 and 19 May 2020.
- The interest rates shown are for purchases - i.e. the rate paid for basic use of a credit card rather than cash advances, balance transfers or other features.