Credit card providers making nearly $90m 'by not following RBA rates'

Providers of credit cards have managed to make nearly $90 million from ignoring official Reserve Bank of Australia rates, analysis has shown.

Credit card companies have netted close to $90 million after ignoring the official rates set by the Reserve Bank of Australia (RBA).

Analysis by the Sunday Age reveals that the "low-rate" products have attracted an interest rate of 11.43 per cent to 13.26 per cent, although the more expensive Aussie credit options range from 18.43 per cent to 19.65 per cent.

But if the organisations had followed the official rate increases and decreases since October 2008 then the interest levels could be three per cent less than they currently are.

The publication also noted that those who tend to use credit to pay for household essentials due to mortgage issues have suffered from a large rise in interest rates, compared to individuals with more high profile cards.

It was pointed out that the net increase for interest rates in the past year was 1.5 per cent, while for low-rate credit cards it was 1.56 per cent.

And the Sydney Morning Herald has reported that the credit card debt of the nation has reached peak levels at $47 billion, according to Australian Bankers' Association (ABA) figures.

Around 70 per cent of the money owed has come from a third of the 14.5 million Aussie credit cards in the country.

Carolyn Bond, chief executive of Consumer Action Law Centre, said that it was worrying that interest-bearing debt of $34 million was owned by just one-third of holders.

She added: "There are two very different kinds of credit card owners - those who use the credit card as a payment tool and those who, in a minority, owe much higher and will pay interest month-to-month."

However, ABA boss Steven Munchenberg declared that lenders have to charge increased interest rates for products such as credit cards and he stated: "The amount of money banks have to write off for credit cards is much higher than for mortgages."

By Emma North