Justine Davies from Comparison site Canstar. Photo: www.moneysmartweek.org.au

Justine Davies from Comparison site Canstar. Photo: www.moneysmartweek.org.au

Choice and comparison site Canstar have joined forces to put pressure on outrageous credit card interest rates. The consumer advocates have revealed that Australia has more than a dozen lenders charging in excess of 20 per cent on the their credit cards, despite the cash rate wallowing at an all-time low of 2.5 per cent.

Rather than interest rates coming down since the GFC card issuers have increased their fees, on average, by 2.5 per cent.

Both groups are appalled at the profit gouging

Matt Levey told reporters that the exorbitant fees were accruing $35 billion a year. The latest interest rate hike alone accounts for $870 million a year. This at a time when Australia’s unemployment is at a 12 year-high and cash rates at record lows

The worst offenders are thos branded a Platinum wich offer rewards with airlines or retailers. It seems now, more than ever, peole are paying for exclusivity.

Justine Davies, from Canstar, warned borrowers to be wary of so called ‘rewards’ programs. The larger rewards are being paid for by the higher interest charges for late payments.

It is estimated that half of Australian households suffer some form of credit card debt. Of these a third also shoulder a mortgage.

One of the most insidious traps by credit card companies is to offer low upfront fees which balloon into a higher ongoing rate after a certain period.

The worst offender, it is alleged, is GE Money. They offer a low rate of 9.99 per cent on six months of balance transfers. But once that time expires their rate soars to a usurious 23.5 percent.

Ms Davies advised consumers to look around: “You can’t rely on your bank – which, after all, has to make a profit for its shareholders – to tell you that you’re paying too much interest.”

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