(Australian Associated Press)
Consumers should shop around if they’re not happy with the interest rate being charged on their credit card, banks say.
A parliamentary inquiry will investigate credit card interest rates charged by banks, amid a growing gap between those rates and the record low official cash rate of two per cent.
The Australian Bankers’ Association argues if customers feel they are paying too much in interest, they have a lot of choices for finding a credit card with a lower rate.
“Our view is that the market is highly competitive, there’s a lot of choice out there and there’s no real barriers to customers exercising that choice,” ABA chief executive Steven Munchenberg told AAP on Wednesday.
The ABA argues the interest rate on credit cards is driven by the unsecured and therefore riskier nature of credit card lending and the cards’ features, not the cash rate.
“They’re not like mortgages which are all much the same and therefore price is the main thing that differentiates between them,” Mr Munchenberg said.
The ABA says there are about 200 credit cards on offer from more than 60 financial institutions with interest rates from 5.3 per cent to 20.99 per cent.
Mr Munchenberg said there are a lot of low interest rate cards available and the higher rate cards tend to have features such as rewards programs.
If consumers are unhappy with the rate they should talk to their bank about getting a better card and otherwise get on a comparison website and shop around for a better deal, he said.
The ABA will lodge its submission to the inquiry in a few weeks.