It’s no secret that the banks have failed to pass on the last ten rate drops from the RBA. Credit card rates remain as high as they ever were – and in some cases have actually risen – putting extreme pressure on those with debt.

In a week’s time the Senate will meet to conduct an inquiry into why the banks have chosen to put their profits before the public welfare.

To underscore the importance of the inquiry consumer group Choice has released its findings into the impact of the greed shown by the banks.

  • Since 2011 the RBA has dropped the cash rate 10 times. The banks have passed on none of these drops, preferring to take the difference between the interest they pay, borrowing the money from the RBA, and the interest they make, from borrowers, in pure profit. The amount flowing into the coffers of banks (instead of relieving the debts of Australians) works out to be more than $2 billion, or around $281 for every credit card owner.
  • Of the 55 major credit card providers only 16 per cent changed their card rates within 30 days of an official cash rate drop.
  • Even worse: the comparison site Mozo found that the average credit card rate has actually climbed while the cash rate has dropped. In June 2011 the average credit card rate was 17.41 per cent, but in May of this year it was 17.61 per cent!
  • Research by New Corp Australia found that Treasury modelling believed the profit margin of banks has increased by a third since the Global Financial Crisis.

“This comes at a time when one in five Australians are living off their credit card to get through to payday,” said Erin Turner, campaigns manager of Choice.

“They (the banks) aren’t competing on price and are keeping consumer costs high even though their cost for providing credit has dropped.”

Choice intends to present their findings as part of a submission to the senate at the inquiry.

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