While Australians enjoy the lowest cash rates in decades, with home loan rates to match, rates on credit cards have barely budged over the years.
Since November 2011 the Reserve Bank of Australia has slashed the cash rate from 4.75 percent down to 2.5 percent. Yet despite the RBA’s 2.25 percentage point rate decline over the past 2.5 years, the average credit card interest rate has only fallen 0.37 percent. That’s a margin of 1.88 percent that hasn’t been passed onto the Australian public.
Additionally, some credit card providers have increased their credit card interest rates.
Figures by RateCity.com.au show that the highest credit card interest rate has increased by 0.51 percentage points, from 22.99 percent to 23.5 percent, over the same RBA rate decline period.
“The cash rate has almost halved since November 2011 and credit card interest rates remain very high,” CEO of RateCity.com.au, Alex Parsons, said.
“It’s a tough one for those people who have a credit card debt. To people who are paying between 17 and 22 percent on their credit card, stop spending and move to a personal loan, the rates on these are around 10 percent.’’
With Australians currently owing an estimated $34 billion in credit card debt, with the average card holder paying around $800 in interest per year, it’s a concerning trend to see interest rates continue to rise, along with the debt, despite historically record-low cash rates.
The RBA’s latest cash rate announcement is due today with many home owners anxious to see how a rate increase could affect them, but for credit card holders it’s business as usual as they turn to their lenders for interest rate increase news – not the RBA.