Watchdog slams ANZ interest on credit cards

The ANZ Bank has broken the 20 per cent barrier on credit-card interest rates - and earned a blast from a consumers' watchdog.

Consumers' Institute chief David Russell said that by increasing its debit balance interest rate from 19.95 per cent to 20.7 per cent on standard credit cards, ANZ had taken the lead among banks pushing debt products.

A "psychological barrier" had been broken. "It's a scandal for any bank to charge so much."

The bank has defended the increase as a response to the market.

However, Mr Russell said the move was typical of present bank behaviour, where customers are given more credit while interest remains high.

"Banks have been quick to offer customers increased lending limits in recent months, and the ANZ is now leading the pack.

"They're pushing to sell. How they do it - whether it's commission based, letters to customers, tacked on the end of the bills - is immaterial."

He urged people to seek other options. "You can get a credit card with interest rates almost half what the ANZ are charging."

ANZ spokesman Craig Howie said the bank's proprietary credit-card rates had not increased since November last year despite significant market interest rate rises.

"Our new card interest rates represent only a partial recovery of our increased cost of funds ... Credit cards remain a popular and competitive product for our customers."

Cardholders can pay their outstanding card balances each month and avoid paying any interest. ANZ also has other credit-card options with lower interest rates, Mr Howie said.

Bank workers' union Finsec, which represents nearly 2000 Westpac staff, said union members plan to strike today in action that could disrupt banking at the time of the year when spending hits its peak.

This week the Banking Ombudsman, Liz Brown, also hit out at banks for extending credit to customers who may not be able to afford repayments and pre-approving credit cards to people who have not applied for them.

She said banks were generally encouraging their customers to take on debt they could not afford. 

 
Do the Math

Standard credit card interest rates

* ANZ 20.7%
* Westpac 19.95
* BNZ 19.95
* National Bank 19.75
* ASB 19.25
* Kiwibank Mastercard 12.9