Credit card issuers make big profits by not passing RBA rate cuts

By Ceyda Erem ·

When the RBA announces it will be reducing the official cash rate, many Aussies are left anxiously waiting for their home loan lender to make a move and follow suit. This is not surprising given that mortgages are usually the highest expense for any household.

But what about the rates on our credit cards

New Mozo research has found that credit card providers have profited a whopping $6.4 billion by failing to pass on 4.40% in cash rate cuts over the past eight years. 

“The failure to provide rate relief to credit card customers after the RBA cuts the official cash rate has become a bad habit and a multi billion dollar business,” said Mozo Director, Kirsty Lamont. 

“At a time when credit card providers are faced with increasing competition from Buy Now, Pay Later services, something as simple as providing interest rate relief could be the difference between retaining customers or not.”

Mozo’s data shows that the average credit card interest rate is also 164 times higher than the cash rate at 16.39%. However, while $20 billion dollars worth of balances are continuing to accrue interest across the country, Aussies have been making the effort to reduce their credit card debt, as balances have fallen by an impressive 46% since 2012.

The credit card market: the lone wolf and the lowest offer

According to the Mozo database, Auswide Bank was the only credit card provider who made a move following the recent RBA rate cut, slicing 15 basis points off its credit card. 

“With just one provider taking the knife to their credit card interest rates, it begs the question - why can’t the rest do the same and pass on the official rate,” says Lamont.

The lowest purchase rate in the Mozo database belongs to Greater Bank and its Greater Visa Credit Card, which currently boasts a purchase rate of a rock bottom 5.95% - however this rate is only available until 1 April 2021.

“If your credit card provider hasn’t cut your interest rates and you're carrying a balance forward it’s worth comparing interest rates and switching to the best rate you can find,” Lamont concluded. 

So, if you’re ready to start comparing some of the current credit card offers on the market, head on over to our credit card comparison tool or get started with some low rate offers below.

Compare low rate credit cards - last updated January 23, 2021

Search promoted credit cards below or do a full Mozo database search. Advertiser disclosure.
  • Bendigo Bank Low Rate Credit Card

    Bonus $150 Woolworths Supermarket Gift Card when you spend $1,000 on eligible purchases within 90 days of opening your account. 0% on purchases for 15 months from account opening (Reverts to 11.99% p.a) Annual fee of $45 and no fees for additional cardholders.

    Purchase rate
    Balance transfer rate
    Annual fee
    0% p.a. for 15 months then 11.99% p.a.
    No current offer
    $45
    Compare
    Details
  • Bankwest Breeze Mastercard

    Enjoy 0% p.a on balance transfers for 26 months (2% BT fee applies) then 10.99% thereafter. No annual fee for the first year. Limited time only. Other fees, T&Cs apply. New Mastercard Breeze customers only.

    Purchase rate
    Balance transfer rate
    Annual fee
    10.99% p.a.
    0% p.a. for 26 months and then 10.99% p.a. (2.00% balance transfer fee)
    $49 $0 in the first year
    Compare
    Details
  • Defence Bank Foundation Credit Card

    Defence Bank Low Rate Credit Card offers a 3.99% p.a. 6 month introductory rate on balance transfers, purchases and cash advances. Up to 55 days interest free on purchases.

    Purchase rate
    Balance transfer rate
    Annual fee
    3.99% p.a. for 6 months then 8.99% p.a.
    3.99% p.a. for 6 months and then 8.99% p.a.
    $45
    Compare
    Details
  • ME frank Credit Card

    Meet Frank, a low rate credit card with up to 55 interest free days, no annual fee and no strings attached. If simple, hassle free spending is your goal, you and Frank might be a match made in heaven.

    Purchase rate
    Balance transfer rate
    Annual fee
    11.99% p.a.
    No current offer
    $0
    Compare
    Details
  • mozo-experts-choice-2020
    St.George Vertigo

    0% p.a. for 24 months on balance transfers requested at card application. No balance transfer fee. Rate then switches to applicable variable cash advance rate. First year annual card fee waived for the first year ($55 thereafter). Available to new cards only, Eligibility criteria and T&Cs apply. Offer ends March 30th 2021. Mozo Experts Choice Balance Transfer Credit Card Winner 2020^.

    Purchase rate
    Balance transfer rate
    Annual fee
    13.99% p.a.
    0% p.a. for 24 months and then 21.49% p.a.
    $55 $0 in the first year
    Compare
    Details

^See information about the Mozo Experts Choice Credit Cards Awards

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