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

  • Promoted

    Apply By 31 October 2019

    Qantas Money Qantas Premier Everyday

    0% p.a. for 12 months and then 21.99% p.a.

    19.99% p.a.

    $49 $29 in the first year

    Receive Up to 42,000 points (7,000 points each month for the first 6 months when $1k or more each month). With a low annual fee of $29 for the first year.

    • 0% p.a. for 12 months and then 21.99% p.a.

    • $49 $29 in the first year

    • 19.99% p.a.

    • 55

    • 21.99% p.a.

    • 3%, min $3.00

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    Read our Mozo Review to learn more about the Qantas Premier Everyday

    Details Close

  • 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.

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

    • $49 $0 in the first year

    • 11.99% p.a.

    • 55

    • 21.74% p.a.

    • 2.00%, Min $3.50

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

    Details Close

  • Promoted

    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, no annual fee and no strings attached. If simple, hassle free spending is your goal, you and Frank might be a match made in heaven.

    • No current offer

    • $0

    • 11.99% p.a.

    • 55

    • 11.99% p.a.

    • 2%, Min $4.00

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

    Details Close

  • Promoted

    Virgin Money Virgin Australia Velocity Flyer Card - Purchase Rate and Balance Transfer Offer

    0% p.a. for 6 months and then 20.99% p.a.

    0% p.a. for 14 months then 20.74% p.a.

    $129 $64 in the first year

    Receive a $129 Virgin Australia gift voucher each year. 0.0% p.a. on purchases for up to 14 months. $64 annual fee in the first year ($129 after)
.

    • 0% p.a. for 6 months and then 20.99% p.a.

    • $129 $64 in the first year

    • 0% p.a. for 14 months then 20.74% p.a.

    • 44

    • 20.99% p.a.

    • 2.7%, Min $2.70

    • Points are credited to the Velocity Frequent Flyer program.

    Details Close

  • Promoted

    Suncorp Clear Options Platinum

    0% p.a. for 14 months and then 21.99% p.a.

    0% p.a. for 14 months then 20.74% p.a.

    $129 $49 in the first year

    Save with 0% interest for 14 months on Purchases and 0% p.a. for 14 months on Balance transfers. Plus, $49 annual fee for the first year, offer ends 30 September 2019.

    • 0% p.a. for 14 months and then 21.99% p.a.

    • $129 $49 in the first year

    • 0% p.a. for 14 months then 20.74% p.a.

    • 55

    • 21.99% p.a.

    • 3.50%, min $3.50

    • Redeem your points for travel, gift cards, retail rewards and shopping gift cards.

    Read our Mozo Review to learn more about the Clear Options Platinum

    Details Close

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