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One of the industry’s most influential associations has criticised the ‘exorbitant’ charges and fees on late credit card repayments, calling them a ‘festering sore’ in need of government intervention.
The Finance Brokers Association of Australia said the recent High Court decision to dismiss a major bank's class action has (again) put the spotlight on the issue of excessive credit card rates and charges.
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The FBAA’s Peter White has called on the new Minister for Revenue and Financial Services, Kelly O’Dwyer, to investigate the real cost of late credit card payments.
He also recommended she follow the lead set by the Labor government in 2011, which banned mortgage exit fees altogether.
Mr White acknowledged the right of the banks to recoup the money they lend out, but he also said charging a late fee of more than $20 was just ‘blatant gouging’.
“In the court of public opinion, there would be many thinking these outrageous late fees, which for one bank was around $35, were plainly unjust, unfair, and unconscionable,” he added.
“We acknowledge there is a cost for lenders but perhaps 50 cents a day, including interest for being late, is a much better way to ensure customers’ continued support instead of hitting them with a steep penalty,” Mr White said.
Australians currently hold more than 16 million credit cards which bring in around $9 billion in interest charges and fees to lenders.
[Related: Industry leader “bitterly disappointed” at big four banks]
