Banks defend credit card rates

After receiving a hefty grilling from prime minister Kevin Rudd earlier this month for failing to bring more cheap credit cards on to the market, banks are now being forced to defend themselves against accusations that they are closing up shop to small businesses.

The Australian reports that the country’s banks have all faced allegations that they are refusing to extend credit and loans to small businesses as they look to minimise risk.

However, correspondent Jennifer Hewitt reports that the Big Four are in a good position to offer new credit lines to businesses as competition decreases and are continuing to attract new clients.

“What the banks are doing, however, is demanding greater security for their business loans and higher interest rates to compensate for increased risks and their own wholesale costs of funding,” she explains.

Earlier this month, Mr Rudd slammed the banks for failing to bring out new cheap credit rates in line with swathing cuts in the base rate.

While waves of new low-interest home loans have flooded the market in the wake of the Reserve Bank’s base rate cuts, credit card rates have remained stubbornly high, Mr Rudd bemoaned.ADNFCR-1761-ID-19018569-ADNFCR