The Reserve Bank meets today to decide on what to do with the nation’s interest rates. But not all debtors can expect to benefit from an interest rate cut.

Credit card companies have not passed on any of the previous rate cuts, so it seems unlikely they will start now.

Research by Canstar has shown the average rate of interest being charged on credit cards is 17 per cent (while the cash rate is only 2.25 per cent).

What worries Canstar’s Mitchell Watson is that in 2007 the average credit card rate was 14.5 per cent, while the cash rate was 6.5 per cent.

This means that in the last 7 years average credit card interest rates have risen 2.5 per cent as the cash rate has fallen by 4.25 per cent!

This is all pure profit for the credit card companies – Profit being gouged out of debtors already struggling in a difficult economic climate.

 “I’d be surprised to see average credit card rates coming down any time soon,” said Mr Watson, “there’s no real consumer demand for it to happen.”

But not everyone agrees on that final point.

Lisa Montgomery, a consumer finance specialist, believes there is no justification for the ever expanding gap between cash and credit rates. She admits that credit card debt is higher risk than a mortgage, but not to the extent reflected in the different rates.

She urges customers and consumer groups to pressure lending institutions to lower their credit card rates. Card companies won’t reduce rates on their own. And it’s only fair that reductions in cash rates be passed onto consumers instead of fattening the purses of already wealthy creditors

Australians currently owe a jaw-dropping $50.9 billion. Of this $34.2 billion is accruing interest.

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