Banks push up credit card rates
Australia’s big banks have been quietly lifting their credit card interest rates, despite rising expectations of official rate cuts by the Reserve Bank later this year.
A new analysis of the big four banks by comparison website Mozo.com.au has found that both low-rate and high-interest reward cards have gone up since late 2023.
In June, Westpac will join the other three majors – CBA, NAB and ANZ – with a rewards credit card rate of 20.99 per cent, it says.
Rate increase across their cards have climbed between 0.5 per cent and 1.25 per cent since September last year, and Mozo spokeswoman Rachel Wastell said banks had also been making their rewards programs less valuable.
“Over the past few years, ‘buy now, pay later’ (services have) taken more and more of the short-term credit market, which means the banks are earning less and less interest on credit cards,” she said.
“This can be seen in the declining value of credit card balances, which RBA data shows have dropped by $8bn in the past 10 years.
“Mozo analysis shows annual fees have increased by 25 per cent in the past 10 years, which could be to make up for the impact that BNPL has had on their businesses.”
Credit card interest rates among all lenders range from 7.49 per cent to 27.49 per cent, and the median rate on Mozo’s database is 19 per cent.
Ms Wastell said the terms on zero per cent balance transfer credit cards were also getting tougher, with the interest-free term falling from 36 to 28 months. The Australian Banking Association was contacted for comment.