Time for banks to drop credit card interest rates

Finsec called on banks this week to make significant cuts to credit card interest rates, as the margins on this form of lending appear to have grown by more than 200% in the last year.

Based on the difference between the 90 day bill rate and what banks are charging on their standard credit cards, the banks’ margins on credit card debt have ballooned from around 140% in January 2008 to a whopping 470% this year.

“This level of margin growth at the expense of customers is frankly astounding,” said Finsec General Secretary Andrew Casidy.  “The minor reductions banks have made to credit card interest rates are tokenistic tinkering.”

“We calculate that if the banks’ margins remained the same as they were in January 2008, then standard credit card interest rates should be about 8.4% today,” said Casidy. “It’s time for banks to step up and actually do something to help New Zealand customers out.”

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