“Australians are being ripped off.”

That was the verdict form Senator Sam Dastyari in the Senate inquiry into credit cards.

Since 2011 the cash rate has been getting lower, but the banks have maintained (or in some cases increased) the interest they charge on credit cards.

And as the gap continued to widen, and the banks’ profits increased, so Australians found themselves in increasing amounts of debt.

Figures released by the Australian Prudential Regulation Authority (and reported in a news.com.au exclusive) revealed a 70 per cent rise in the price attendant on paying with credit cards. In 2004 the price of using plastic was $3.1 billion; in 2015 this has exploded to $5.4 billion.

Liberal senator and inquiry deputy chairman Sean Edwards added, “The committee has heard competition in the credit card market isn’t having much impact on interest rates which continue to rise – even while the cash rate drops. I look forward to hearing from industry as to why this appears to be so.”

The banks are due to appear before the committee (and defend the indefensible) from Tuesday.

Joel Gibson, the campaign director of One Big Switch, likened the national credit card bill to a ‘termite colony inside family budgets, multiplying and eating away at funds that should be spent on more vital things.”

One Big Switch is in the process of running the Big Debt Switch aimed at lowering credit card interest bills. 50,000 households have already joined the campaign.

“Hopefully we can drive people to shop around en masse and see if they can save hundreds of thousands of dollars in interest payments between them. That would be real people power.”

On Tuesday the inquiry will hear from representatives of the NAB, the Australian Competition and Consumer Commission, Treasury, American express, and MasterCard.

The Australian Bankers’ Association is also expected to testify.

In an intriguing salvo the ABA issued a statement defending credit cards as ‘strong value propositions’ and arguing that interest rate gaps don’t tell the whole story.

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