Queensland borrowers 'better off due to rate cap'

Moves to cap interest rates on credit cards and other forms of borrowing have proven to be of benefit to Queensland residents, it has been reported.

An initiative to protect low-income Queenslanders from high interest debts has saved them a significant sum of money, it has been reported.

The state's Fair Trading department reveals that, over the past 12 months, consumer protection lawyers from Legal Aid Queensland have helped those deemed to paying excessive rates of interest on their borrowing receive fair treatment from lenders.

Indeed, action by such legal professionals has seen residents escape unaffordable Aussie credit schemes and save a total of $1 million.

"I have been told of situations in years gone by where people have borrowed small amounts of money only to be crippled by the debt caused by excessive interest rates," minister for Fair Trading Peter Lawlor notes.

The introduction of a 48 per cent rate cap - which incorporates all interest, charges and fees attached to borrowing - was also deemed as helping people in the state get a better grip on their finances.

Mr Lawlor adds that the rate cap provides borrowers an element of "certainty" in their money management and gives them a better chance of being able to clear what they owe.

"The laws capping interest rates and other loan charges have now been in force for more than a year, so there is no excuse for further infringements," he points out, claiming such an Australian banking initiative had been designed to protect people from unsolicited credit card increases and "lending designed to avoid consumer protection laws".

However, officials remain vigilant in monitoring the industry for unscrupulous lenders, those consumers looking to compare accounts in their search for credit may wish to be aware of.

Such news comes as a recent study conducted by MyState Financial showed that many people in Tasmania are worried about their ability to manage their debts. Research released in the firm's latest Economic Index showed confidence in repaying money owed has fallen for three successive quarters.

By Mark Hornby