Proposals for tightening responsible lending rules for credit cards

In a bid to prevent consumers from running the risk of big card balances with high interest charges, the Australian Securities and Investments Commission has raised the possibility to tighten responsible lending rules for credit cards.

This proposal by ASIC has been included in its submission to the Senate Economics References Committee. The committee is inquiring into credit card interest rates and the proposition by ASIC is not the only submission to suggest the idea of tightening responsible lending rules for credit cards.

According to ASIC, it is not high interest rates on cards that lead to hardship. Instead, it is because "some consumers over-borrow and under-pay large amounts of credit card debt (to which the high interest is applied)."

ASIC said: "Some people begin with the intention of always paying off their balance in full and believe they will never pay interest."

The Treasury submission said proposals to clarify and strengthen the obligations on card providers to understand consumers' requirements "merited further consideration".

Treasury said tighter responsible lending rules "may reduce the likelihood of consumers receiving credit cards and credit limits that are inappropriate to their financial requirements."

It is also suggested that credit card providers be required to conduct serviceability assessments depending on repayments required to pay off debt within a reasonable timeline.

Another submission, by Bank Australia, was more emphatic, stating that the inquiry should recommend better use of responsible lending practices. In addition, is also mentioned that credit card accounts going into arrears consistently should be reviewed.

Consumer Action Law Centre in turn proposed that credit assessments for credit cards should be based on whether the consumer could afford to repay the full credit limit within three years. It also added that minimum monthly repayments should be raised.

This discussion over credit cards has come up after interest margins on cards increased sharply during the financial crisis and have increased further in the post-crisis period.

For consumers who are looking to compare credit cards to decide what type of card is best for them, Mozo’s money experts talk about the different features to prioritise and the fees to watch out for in these handy credit card guides.

Credit card comparisons on Mozo - last updated February 27, 2021

Search promoted credit cards below or do a full Mozo database search. Advertiser disclosure.
  • Apply By May 31, 2021
    Bendigo Bank Low Rate Credit Card

    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.

    Purchase rate
    Balance transfer rate
    Annual fee
    Rewards program
    11.99% p.a.
    0% p.a. for 18 months and then 11.99% p.a. (2.00% balance transfer fee)
    $45
    -
    Compare
    Details
  • Bankwest Zero Mastercard

    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.

    Purchase rate
    Balance transfer rate
    Annual fee
    Rewards program
    17.99% p.a.
    2.99% p.a. for 9 months and then 17.99% p.a.
    $0
    -
    Compare
    Details
  • Hot DealLimited time cashback offer
    Westpac Low Rate

    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.

    Purchase rate
    Balance transfer rate
    Annual fee
    Rewards program
    13.74% p.a.
    0% p.a. for 24 months and then 21.49% p.a. (1.00% balance transfer fee)
    $59
    -
    Compare
    Details
  • ME frank Credit Card

    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.

    Purchase rate
    Balance transfer rate
    Annual fee
    Rewards program
    11.99% p.a.
    No current offer
    $0
    -
    Compare
    Details
  • Apply By February 28, 2021
    NAB Qantas Rewards Signature Card

    NABs fastest way to earn Qantas Points. 130,000 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.

    Purchase rate
    Balance transfer rate
    Annual fee
    Rewards program
    19.99% p.a.
    0% p.a. for 6 months and then 21.74% p.a. (2.00% balance transfer fee)
    $395 $295 in the first year
    Qantas Frequent Flyer
    Compare
    Details

^See information about the Mozo Experts Choice Credit Cards Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.