Credit card rates rise as interest falls

In spite of a series of cuts to the official base rate in recent months, new research shows that credit card customers are yet to benefit.

Indeed, research carried out by consumer group Choice reveals that over half of cards issued by banks, building societies and credit unions are charging higher rates now than they were two years ago.

Meanwhile, just a fraction have passed on the cuts to the official rate of interest, which since last September, has gone from 6.25 per cent to three per cent.

It was also revealed that those consumers who have opted for no-frills low-rate cards have not received as many rate reductions as those with more feature-loaded credit card products.

"The people who are really suffering at the moment and trying to do the right thing by having a low-rate card are not getting as much of a break as others," Choice spokesperson Elise Davidson states.

Such comments come as a recent Sunday Telegraph article revealed that not only had banks made some $1.2 billion through penalty fees for those who were late in making credit card repayments or exceeding their limit, they were making massive profit margins when doing so.

Written by Kate Guthrie