Cost of Christmas rises as banks remain tight on credit cards

Australian banks are continuing to walk a tightrope with consumers and retailers by making spending more expensive.

It was revealed last week that the major banks were making (or saving) an estimated $7 million per day by delaying their decision to pass on the federal rate cut to consumers. Now they are further fuelling the ire by refusing to pass on the interest rate cuts to credit cards.

Retailers are especially troubled by this, with many seeing Christmas as an opportunity to recover from a difficult year on the one hand, and to bolster performance ahead of 2012 on the other, as uncertainty continues to unsettle confidence in the Australian economy. The extra interest could cost consumers up to $30 million.

The degree to which credit card spending continues to propel the Australian economy prompts further frustration at the banks’ measures. According to statistics from the Bureau of Statistics, credit card customers have helped Australian GDP to grow by 1% in the third quarter of 2011. But there are concerns that without major changes, many shop owners could go under.

The Financial Ombudsman Service has revealed that it dealt with 30,000 angry complaints against borrowers and banks this year, a rise of 27% on 2010. This clearly shows the degree to which Australians’ patience with financial institutions is running thin.

National Australia Bank, criticised last month for not passing on the whole interest rate cut to consumers, saw the most complaints of the big banks, at 66 disputes per 100,000 customers. Amongst the worst credit card offenders were ACM Group (113 disputes per 100,000 customers), Credit Corp Services, and Lion Finance.

Could Which4U help you avoid the lenders with poor customer relations, and help you find a better credit card? Could you benefit from a balance transfer in the New Year to pay off debts at a lower rate? Check out our listings today and see if life could be a little brighter in the year ahead.

Joe Letts