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

Tom Watson

15 Jul 2019

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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. Advertiser disclosure.

  • Apply By 31 May 2021

    Bendigo Bank Low Rate Credit Card

    0% p.a. for 18 months and then 11.99% p.a. (2.00% balance transfer fee)

    11.99% p.a.

    $45

    0% p.a. balance transfer for 18 months (Reverts to 11.99% p.a). Low annual fee of $45 and no fees for additional cardholders.

    • 11.99% p.a.

    • -

    • 0% p.a. for 18 months and then 11.99% p.a. (2.00% balance transfer fee)

    • 13.99% p.a.

    • 55

    • 3.00%

    • $45

    • $15.00

    • 0.50%, Min $3.25

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

    Details Close

  • Bankwest Zero Mastercard

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

    17.99% p.a.

    $0

    No annual fee and up to 55 days interest free on purchases. Get a notification before your minimum payment is due by setting up Easy Alerts in the Bankwest app.

    • 17.99% p.a.

    • -

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

    • 21.99% p.a.

    • 55

    • 2.95%

    • $0

    • $25.00

    • 2%, Min $4.00

    Read our Mozo Review to learn more about the Zero Mastercard

    Details Close

  • Hot Deal Limited time cashback offer

    Westpac Low Rate

    0% p.a. for 24 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 24 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 24 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

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  • ME frank Credit Card

    No current offer

    11.99% p.a.

    $0

    Meet Frank, a low rate credit card with up to 55 interest free days and no annual fee. If simple, hassle free spending is your goal, you and Frank might be a match made in heaven.

    • 11.99% p.a.

    • -

    • No current offer

    • 11.99% p.a.

    • 55

    • 2.30%

    • $0

    • $10.00

    • 2%, Min $4.00

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

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  • NAB Qantas Rewards Signature Card

    0% p.a. for 6 months and then 21.74% p.a. (2.00% balance transfer fee)

    19.99% p.a.

    $395 $295 in the first year

    NABs fastest way to earn Qantas Points. 110,000 bonus Qantas Points when you spend $3,000 on everyday purchases within 60 days of account opening and keep the card open for 12 months. 7 complimentary insurances when you meet eligibility criteria including Overseas Travel Insurance.

    • 19.99% p.a.

    • -

    • 0% p.a. for 6 months and then 21.74% p.a. (2.00% balance transfer fee)

    • 21.74% p.a.

    • 44

    • 295.0

    • 3.00%

    • $395 $295 in the first year

    • $15.00

    • 2%, Min $2.50

    Read our Mozo Review to learn more about the Qantas Rewards Signature Card

    Details Close

^See information about the Mozo Experts Choice Credit cards Awards