Hang on, are credit card providers passing on RBA rate cuts?

Tom Watson

15 Jul 2019

redactor/hero-images/886/pasted_image_0_content.png

No, not really. 

That’s the simple answer according to new research from Mozo which has found that credit card providers have been making a healthy profit by not passing on rate cuts to their Australian customers. 

Mozo’s figures show that a failure to pass on 3.25% in official rate cuts over the past eight years has resulted in a profit of around $5.2 billion for credit card providers over that period. 

In fact, despite 14 rate cuts from the Reserve Bank Board since 2011 totalling 3.75%, the average credit card interest rate has actually increased by 2.90% compared to the official cash rate. 

“With a staggering $31 billion worth of balances accruing interest across the country, many credit card customers could do with some interest rate relief,” said Mozo Director, Kirsty Lamont.

“Although home loan customers have benefited significantly from the official cuts, credit cards rates have remained stubbornly high.”

RELATED: RBA reveals fee gouging on tap and go payments continues to skyrocket

While not all lenders pass on RBA rate cuts to their home loan and deposit accounts in full, many do adjust their rates, at least in some part, to reflect changes in the official cash rate. 

For example, Mozo has recorded a number of home loan rate cuts from mortgage lenders since the RBA’s June rate cut from 1.50% to 1.25%.          

However, since the last month’s cut, only a handful of credit card providers have reduced their credit card interest rates, with the Mozo database showing that Auswide Bank and P&N Bank were two of a small number of banks to pass on the official interest rate cut by 0.25 and 0.18 basis points respectively. 

“With two providers taking the knife to their credit card interest rates, it begs the question - why can’t the rest do the same and pass on the official cut?” said Lamont. 

“Surprisingly, we have also seen some card providers hiking rates this year with Westpac and St George group pushing through 25 basis point increases across their card portfolios.” 

So what can Australian credit card users sick of high interest rates do?

According to Lamont, one of the best options for Aussies carrying credit card debt is to make the switch to a card with a lower interest rate (if possible) which could save them a bundle in interest. 

“With the RBA eyeing another cut this week, pressure is likely to build on credit card providers to pass on some of any official cut and give their customers some interest rate relief,” Lamont says. 

Ready to compare low rate credit cards today? Get started with some of the great offers below, or head over to Mozo’s low interest credit card hub to compare even more cards yourself. 

Compare credit cards - rates updated daily

  • Promoted

    CUA Low Rate Credit Card

    0% p.a. for 13 months and then 21.74% p.a.

    11.99% p.a.

    $49 $0 in the first year

    0% balance transfer rate for 13 months and up to 55 interest free days. No annual fee for the first year and $49 after.

    • 11.99% p.a.

    • -

    • 0% p.a. for 13 months and then 21.74% p.a.

    • 21.74% p.a.

    • 55

    • 0.0

    • 3.40%

    • $49 $0 in the first year

    • $12.50

    • 2.00%, Min $3.50

    Read our Mozo Review to learn more about the Low Rate Credit Card

    Details Close

  • Promoted

    St.George Vertigo

    0% p.a. for 22 months and then 21.49% p.a. (1.50% balance transfer fee)

    0% p.a. for 7 months then 13.99% p.a.

    $55 $0 in the first year

    Enjoy 0% p.a. for 22 months on balance transfers at card application. 1.5% balance transfer fee applies. Rate then switches to applicable variable cash advance rate. Plus, 0% p.a. on purchases for 7 months. Rate then switches to applicable variable purchase rate. First year annual card fee waived for the first year ($55 thereafter). Available to new cards only, Eligibility criteria and T&Cs apply. Offer ends September 30th 2020.

    • 0% p.a. for 7 months then 13.99% p.a.

    • 0% p.a. for 7 months

    • 0% p.a. for 22 months and then 21.49% p.a. (1.50% balance transfer fee)

    • 21.49% p.a.

    • 55

    • 0.0

    • 3.00%

    • $55 $0 in the first year

    • $15.00

    • 2%, Min $2.50

    Read our Mozo Review to learn more about the Vertigo

    Details Close

  • Promoted

    Bankwest Zero Platinum Mastercard

    2.99% p.a. for 9 months and then 17.99% p.a.

    17.99% p.a.

    $0

    This card boasts no annual fee and the option to pay with the Bankwest Halo payment ring. Plus, with no foreign transaction fees and complimentary travel insurance it's a good pick for travel. Winner of a Mozo Experts Choice Award 2019 in the No Annual Fee Platinum Credit Card category^.

    • 17.99% p.a.

    • -

    • 2.99% p.a. for 9 months and then 17.99% p.a.

    • 21.99% p.a.

    • 55

    • 0%

    • $0

    • $25.00

    • 2%, Min $4.00

    Read our Mozo Review to learn more about the Zero Platinum Mastercard

    Details Close

  • Promoted

    Hot Deal $200 Cashback Offer (T&Cs apply)

    Westpac Low Rate

    0% p.a. for 20 months and then 21.49% p.a. (1.00% balance transfer fee)

    13.74% p.a.

    $59

    Enjoy 0% p.a. interest on balance transfers for the first 20 months. Get $200 cashback with $1k minimum spend on eligible purchases within 90 days of card approval. 55 interest free days and low on-going rate of 13.74% on all purchases.

    • 13.74% p.a.

    • -

    • 0% p.a. for 20 months and then 21.49% p.a. (1.00% balance transfer fee)

    • 21.49% p.a.

    • 55

    • 3.00%

    • $59

    • $15.00

    • 2%, Min $2.50, Max $150

    Read our Mozo Review to learn more about the Low Rate

    Details Close

  • Promoted

    CUA Platinum Credit Card

    0% p.a. for 13 months and then 21.74% p.a.

    19.99% p.a.

    $149 $0 in the first year

    0% p.a. balance transfer, $0 annual fee for the first year and also receive 1 rewards point for every dollar spent. Concierge service and purchase protection insurance.

    • 19.99% p.a.

    • -

    • 0% p.a. for 13 months and then 21.74% p.a.

    • 21.74% p.a.

    • 55

    • 0.0

    • 3.40%

    • $149 $0 in the first year

    • $12.50

    • 2.00%, Min $3.50

    Read our Mozo Review to learn more about the Platinum Credit Card

    Details Close

Mozo may receive advertising fees from the financial institutions, issuers of financial or credit products and third party advice providers that are shown on this page. These fees are based on a cost per click, cost per acquisition, or a fixed fee.