Consumers win big in credit card shake- up

CONSUMERS will save thousands of dollars in credit card interest and have the option to cancel their plastic online after the nation’s embattled banks privately agreed to dramatically overhaul charges.

The move to help diffuse criticism of eye- watering credit card interest is among a suite of measures sent to the Australian Securities and Investments Commission for approval.

It means Australians will now pay interest only on what remains on their credit card from their purchase – not the full purchase price.

It is a trap many people fall into. They buy a product and if they pay just a portion of the price during the interestfree period, they are still slugged interest on the total amount borrowed.

This will now change under the code, which could be ticked off within months by ASIC.

But a renewed and sustained blowtorch on the banks has sparked another round of reforms under a new enforceable code that will be fairer and save customers money. Other plans include:

No more unsolicited credit card limit increase offers.

Allowing customers cancel a credit card online.

Making banks assess a customer’s ability to repay entire purchase amounts within a certain time when applying for credit.

Giving customers a list of direct debits that come off cards and accounts.

And in another significant overhaul, guarantors will have to wait three days before proceeding as a guarantor on loans in a bid to stop financial abuse or undue family pressure.

The code will be implemented within the 12 months of ASIC signing off, which is likely within months.

Australian Bankers’ Association chief executive officer Anna Bligh said the code was developed after hundreds of hours and more than 50 meetings with banks and stakeholders over nine months. to