Westpac gives credit card users early Christmas bonus

Australian credit card users can already earn themselves a Christmas bonus this year, as Westpac has lowered its rates on some of its credit cards by up to 1.25%.

Some of Australia's biggest banks have been put under pressure to lower interest rate on $40 billion of card debt.

Although lenders were quick to pass on this months 1% cut customers holding home loans, banks have taken more time to cut interest rates on their credit cards.

Their justifications for this delay is that credit card debt is more of a risk as it remains unsecure.

Australian chief executive Ahmed Fahour of National Australia Bank (NAB) also created a dispute last week after branding credit cards as a "sideshow" compared to the significantly larger amounts at risk through other forms of lending, such as the $1 trillion currently in residential lending and $500 billion in business lending.

Australia's Treasurer Wayne Swan disagreed with Mr Fahour's views.

"The Government's view is that the banks can pass through in full the recent Reserve Bank official cash rate cut when it comes to mortgage rates, that they should be doing much better when it comes to business personal loans, and they should be doing much better when it comes to credit cards," he said

After recently raising $2.5 billion from institutional shareholders, Westpac announced its plans to make a 1.25% cut on the purchase rate of its Virgin credit card to 12.99%. The Altitude card will also see a 1% cut to 18.99%, and some business cards will also be lowered by 0.80%.

Westpac spoke of its 1.75% rate cuts made on some consumer and business cards since September. Consumer groups have indicated that official cash rates have dropped by 300 basis points since September.