IMGCAP(1)]
Despite the Reserve Bank of Australia's decision last week to cut the official cash rate by 25 basis points, credit card interest rates keep rising, according to a report from Australian financial service Web site CreditMart.com.au. The Reserve Bank uses the official cash rate, which applies to overnight loans between banks, to influence the price of borrowing money. Last week, CreditMart.com.au researched 146 credit cards and found nine increased their interest rates, while two credit cards decreased theirs. The average purchase interest rate was 16.6%, while the cash-advance rate was 17.9%, according to the report. Interest rates on gold and platinum cards were nearly three percentage points higher than classic cards, according to the report. Shane Stocks, CreditMart.com.au managing director, said in the report he believes banks eventually will cut purchase interest rates, but cuts in the cash-advance rate will take longer. "Banks have long held the view that cash-advance transactions hold a greater default risk than purchase transactions," Stocks says. "Given the current economic environment, the banks will be doing what they can to reduce their perceived risk on their credit card portfolios."
