The Federal Government and Australia’s major banks have been asked to review credit card interest rates, amid growing concerns they are excessive and out-of-step with other interest rates.
Treasurer Tim Pallas has joined by Finance Sector Union State Secretary Nicole McPherson to call on the major banks and the Federal government to act now to ensure consumers are not exposed to an unreasonable or unfair financial burden from high credit card rates.
It follows a letter issued by the Labor Government to Federal Treasurer Josh Frydenberg and each CEO of the National Australia Bank, ANZ, Commonwealth, Westpac, Bendigo, Bank of Queensland and Macquarie banks seeking an urgent review, an official press release said.
In a recent Senate Standing Committee on Economics Legislation hearing, the Governor of the Reserve Bank, Dr Philip Lowe, expressed frustration that some credit cards continue to charge interest rates upwards of 20 per cent, despite the Reserve Bank’s cash rate falling to only 0.1 per cent.
The Labor Government shares the Governor’s concern and wants action—by banks, policymakers and regulators—to ensure consumers are not exposed to an unreasonable or unfair financial burden as a result of excessive rates.
Currently, there is only one legislative restriction on credit card interest rates which allows a maximum credit interest rate of 48 per cent—in the current interest rate environment, it is woefully inadequate.
The Labor Government is asking the Commonwealth to investigate the option of mandating a maximum margin between credit card interest rates and the cash rate.
This could be implemented in a similar fashion to the current maximum interest rate which applies for all credit contracts that fall under the National Consumer Credit Protection Act 2009.
“Our banking leaders and the Federal Government must act to ensure consumers are not exposed to an unreasonable or unfair financial burden from high credit card rates. Banks have benefited from excessive interest rates for far too long. It’s time they do the right thing and start earning back the public’s respect,” Pallas said.
Relieving the financial burden of high credit card rates will not only help those people struggling with credit card debt, it will support consumers and boost the economic recovery from the coronavirus pandemic crisis, the release added.
Follow The Indian Sun on Twitter | Instagram | Facebook
Support Independent Community Journalism
Dear Reader,The Indian Sun exists for one reason: to tell stories that might otherwise go unheard.
We report on local councils, state politics, small businesses and cultural festivals. We focus on the Indian diaspora and the wider multicultural community with care, balance and accountability. We publish in print and online, send regular newsletters and produce video content. We also run media training programs to help community organisations share their own stories.
We operate independently.
Community journalism does not have the backing of large media corporations. Advertising revenue fluctuates. Platform algorithms change. Costs continue to rise. Yet the need for credible, grounded reporting in a multicultural Australia has never been greater.
When you support The Indian Sun, you support:
• Independent reporting on issues affecting migrant communities
• Coverage of local and state decisions that shape daily life
• A platform for small businesses and community groups
• Media training that builds skills within the community
• Journalism accountable to readers
We cannot cover everything, but we work to cover what matters.
If you value thoughtful reporting that reflects Australia’s diversity, we invite you to contribute. Every donation helps us maintain the quality and consistency of our work.
Please consider making a contribution today.
Thank you for your support.
The Indian Sun Team
