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.”
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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.