Aussie banks under pressure to end ‘predatory’ tactics
LENDERS face a ban on sending customers enticing credit card limit offers or new cards.
A proposal by finance commentator David Koch is expected to be included in the recommendations of the Senate inquiry into plastic.
Credit card issuers can send invitations to increase credit card limits – both for new and existing cards – if customers opt to receive “marketing material”.
The nation’s plastic woes have hit the highest level since the Reserve Bank began collecting figures in the 1980s.
Australia now owes $51.46 billion on plastic, with $33.1 bil- lion accruing interest. Mr Koch said financial institutions’ “predatory tactics” must stop, and it should be up to customers to “take ownership” of their decisions.
“There should be no unsolicited credit cards or credit card limit increases,” he said. “By stopping this, a customer makes a decision. They are at least thinking about how they pay it off or the purpose of the card.”
Figures from financial comparison website Canstar shows the average interest rate on cards with no maximum limit is about 18 per cent.
Credit card inquiry chairman Sam Dastyari told The Courier-Mail: “You should only be getting an increase when you request one … banks constantly flogging products that aren’t requested should end.”
“I can’t see how allowing them is in the interest of consumers. The anecdotal evidence I have been given is that these increases always turn up around the holiday season and other financial pinch points.”
Banks are to appear before the inquiry this month.
The Big Debt Switch –a month-long campaign to slash credit card bills – has already attracted more than 31,000 customers, overtaking the original target of 25,000. The target is now 50,000.
News Corp has joined consumer group One Big Switch to fight the growing problem of debt. Join the Big Debt Switch and several deals that could lower your debt costs.
There is no obligation to take up the offer.
News Corp and One Big Switch will earn a commission from any accepted deals.