Mortgage Choice CEO John Flavell has backed the federal Treasury’s view that credit card providers are exploiting “consumer inattention” to keep interest rates higher than necessary.
Mr Flavell said credit card interest rates are incredibly high and can easily become a “money trap” for many consumers.
“Our data shows 57.5 per cent of Australian consumers have some form of credit card debt. Of those with debt, 35.4 per cent have more than $5,000 in credit card debt, while just 11 per cent said they owe less than $500 on their card,” he said.
“When you consider that most credit cards have an interest rate of 14 per cent or higher, those who make the minimum repayment on their credit card each month may find it takes them years to pay off their debt.”
With the recent Senate inquiry into credit cards putting the spotlight on high credit card interest rates, Mr Flavell said now is the perfect time for consumers to review their options and see whether or not there is a better deal for their needs.
“The federal Treasury told the Senate inquiry this week that consumers were unknowingly paying higher credit card fees than they should because they weren’t paying attention,” he said.
“And while I certainly believe this is the case, I also believe consumers pay higher fees because they take the path of least resistance. They will obtain a credit card through their current lender because it is easy to do so.
“Instead, consumers should take the opportunity to review their options, go online and do their research. By doing their due diligence, consumers may find there is another provider offering a credit card with a lower interest rate and better incentives.”