Every day that your credit card interest rate remains high, it gifts every the major bank almost $900,000. No wonder you can't pay your bills or your card card down!
Australia's four big banks have failed to deliver any relief on the nation's credit card holders despite the RBA discounting official cash rates by a full 1 per cent.
Fears of global recession yesterday wiped $56 billion from the value of local shares and sent the dollar plunging to a five-year low.
The Australian stockmarket dived 5 per cent. Bank stacks were hit hard.
In a move that had been anticpated by Mr Mortgage on Tuesday, lobal central banks took the necessary step last night of co-ordinating a series of interest rate cuts in a bid to stop further stockmarket plunges.
But as world markets melt down analysis commissioned by The Courier-Mail shows that each day the interest rate on credits cards remains unchanged, Australian banks pocket an extra $886,500.
If the rates remain frozen for a whole month, banks will score a windfall profit of almost $27 million, according to finance research house Cannex.
A leading consumer advocate yesterday angrily hit out at the banks, accusing them of hurting ordinary Australians doing it tough.
"Not passing on any interest rate cut to credit card holders is just punishing people who are already struggling," said Nicole Rich, of the Consumer Action Law Centre.
Almost every Australian adult has at least one credit card and the nation's collective card debt, attracting interest, has blown out to $32.4 billion.
As the global economic firestorm gathers pace and hits the Australian economy, many households will find it harder to pay off ballooning credit card debts.
Many popular Australian credit cards have interest rates as high as 20 per cent and Cannex calculates the average credit card interest rate is 16.8 per cent.
On Tuesday, all big four banks moved swiftly to cut home lending rates by 0.8 per cent when the Reserve slashed the cash rate to 6 per cent, but it is a different story when it comes to credit.
The Courier-Mail contacted the Commonwealth, the ANZ, National Bank and Westpac, who all conceded credit card interest rates remained unchanged but insisted they were "under review".
A spokeswoman for the Australian Bankers Association refused to comment on credit card rates, saying it was a matter for individual banks.
Sharemarket battered
In another day of high drama, there were further signs the Australian economy could be tanking.
The Australian sharemarket dived yesterday with the All Ordinaries shedding a hefty 228 points.
Consumer sentiment fell to near 17-year lows and the number of owner-occupied housing loans fell for the seventh straight month.
Craig James, of Commonwealth Securities, said the new data justified the Reserve Bank's decision to go for a 1 per cent cash rate cut on Tuesday.
The four major banks have all opted to pass on 80 per cent of the cut – 0.8 per cent – on home loan rates.
But Opposition Leader Malcolm Turnbull tried to claim credit, saying if it was not for the Opposition then the banks would not have passed on such a large amount.
"I have stood up for borrowers and I think borrowers have got a better deal as a result," he said.
Treasurer Wayne Swan hit back, accusing Mr Turnbull of letting his arrogance get out of control.
"I know Mr Turnbull thinks that the whole world revolves around his ego, but there are some events in the world which are much bigger than Mr Turnbull's ego," Mr Swan said.
Meanwhile, economic researcher, David Richardson, of The Australia Institute, estimated Australia's big banks could boost their annual profits by $1.4 billion by not passing on the full 1 per cent rate cut on home loans.
But the Commonwealth Bank has vowed to reduce its mortgage rates by more than 1 per cent when markets return to normal.
The Commonwealth yesterday also announced a takeover of BankWest in a deal worth more than $2 billion.
Queensland Premier Anna Bligh said although the Prime Minister had insisted banks absorb some of the cut, the full savings should be passed on as a "matter of principle".
"I understand the Prime Minister has been saying he believes that this interest rate cut should be passed on as fully as possible," she said.
