HomeView 2015 Media ReleasesBetter education, not regulation, on credit cards

The Customer Owned Banking Association says better consumer education, not further regulation, is the way to improve the credit card market.

The Customer Owned Banking Association says better consumer education, not further regulation, is the way to improve the credit card market.

COBA’s submission to the Senate Economics Committee Inquiry into Credit Card Interest Rates calls for measures to empower consumers and promote competition in the credit card market.

“Independent consumer polling commissioned by COBA shows low awareness by consumers about their credit card interest rate and who offers the lowest rate cards,” COBA CEO Mark Degotardi said.

According to Canstar’s online database, interest rates on standard credit cards offered by customer owned banking institutions are on average almost one-third lower than the major banks, with more free days and lower annual fees.[1]

Interest rates

Free days

Annual fee Apply

Customer Owned ADIs

12.89%

53.6

$38.50

4 Major Banks

18.06%

49.9

$60.40

The Canstar Online Database also shows that of the 241 personal credit cards subject to analysis, and excluding bonus or introductory rates, 19 of the 20 lowest rate cards on the market are offered by customer-owned banking institutions.

“The credit card market is delivering competitive products and choice to consumers but the challenge is ensuring that consumers are informed and empowered to act in their own interests,” Mr Degotardi said.

COBA recommends that the Committee:

  • supports allocating resources to communications campaigns to inform and empower consumers in the credit card market;
  • supports prompt implementation of the FSI’s recommendations to improve banking competition;
  • rejects increasing the regulatory compliance burden on card issuers; and
  • supports card issuers being able to continue to recover costs through interchange fees for benefits provided to merchants.

For more information please contact:

Daniel McDougall, Senior Manager – Media and Communication

02 8035 8444 or 0407 637 541, This e-mail address is being protected from spambots. You need JavaScript enabled to view it

[1] Canstar database, 22 June 2015.

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