Some of the country’s major credit card providers have been ratcheting up efforts to offset the impact of the federal Government’s credit reforms, which come into effect at the start of July, according to financial comparison specialist RateCity.

 

Providers have been aggressively pushing to secure new customers before the reform comes into place according to RateCity spokesperson Michelle Hutchinson said.

 

“It’s clear that some credit card providers are on edge about the new credit laws. The credit reforms could affect their revenue and some card providers are doing everything they can to protect it,” Ms Hutchinson said.

 

“For instance, over the limit fees will be banned unless card holders agree to use the service. Banks were making about $1 billion each year in household exception fees – which include over the limit fees on credit cards – according to the Reserve Bank. So it’s no surprise that we’ve found nine personal credit cards increase their annual fees since October 2011.”

 

There are several changes to new and existing credit card contracts. Some of these will include:

 

  • For new customers:
    • Credit card key fact sheets: card holders should ask for this sheet if they are not given one when signing up for the new account
    • Over the limit fees (also known as exception fees) will be banned, unless customers specifically agree to receive the service: card holders should check they will not receive this service if they don’t want to exceed their credit limit with a fee.
    • Repayments must be directed to the debt with the most expensive interest rate first: this refers to debts with more than one interest rate. For example, for a credit card with a balance transfer debt of $5,000 at 1 percent interest and a $2,000 debt from purchases with a rate of 17 percent, repayments will be made to the purchase debt of $2,000 first.
    • For all customers:
  • Offers to increase credit limits will be banned unless customers provide consent: if a card holder does not want to receive credit limit increase invitations, they can still apply for an increase at any time.


Ms Hutchison said that card holders shouldn’t feel pushed into credit card deals and they can make a complaint if they are not happy with their provider.

 

“Australia’s credit card industry is very lucrative, with providers earning over $6 billion* each year in interest alone according to RateCity. While it’s justifiable for credit card providers to charge customers for a service, customers should never feel bullied into agreeing to their terms