Yahoo Finance Westpac hikes credit card interest rates: 'Wake-up call'
Westpac rewards and low-fee credit card customers will be hit with higher interest rates from today.
Westpac has hiked the interest rates on its rewards and low-fee credit cards. The move means none of the Big Four banks offer rates under 20 per cent to their rewards customers.
Interest rates increased on Thursday from 19.99 to 20.99 per cent on Westpac’s Altitude Black and Platinum rewards cards. The rate on its Low Fee card has risen from 19.74 to 20.99 per cent.
Cash advance rates have also increased from 21.49 to 21.99 per cent.
The move followed Westpac's announcement that rewards customers could use their rewards points to pay for everyday items.
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There has been spate of interest rate hikes from the other major banks — Commonwealth Bank, ANZ and NAB — since August last year.
All of the Big Four now have interest rates of 20.99 per cent on their frequent flyer and rewards credit card offerings.
RateCity research director Sally Tindall said Westpac was catching up with its competitors but stressed that “four wrongs don’t make a right”.
“As of today, it’s impossible to get a big bank credit card with a rate under 20 per cent that also offers rewards points,” Tindall said.
“This will hopefully serve as a wake-up call for any Westpac credit card customers who are carrying around debt to do a health check on their card.”
Westpac subsidiaries St George, Bank of Melbourne and BankSA will also hike interest rates on select credit cards to 20.99 per cent on July 4.
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Credit card debt rises
The total credit card debt Australians are accruing interest on rose by $29 million in April, the latest Reserve Bank of Australia (RBA) data found. The nation has a bill of $17.69 billion.
RBA data showed customers with debt owing are paying an average interest rate of 18.31 per cent, meaning they shelled out nearly $8.9 million a day in interest charges during the month.
According to RateCity’s database, the average credit card rate is 17.59 per cent.
The lowest rate is 7.49 per cent from G&C Mutual, while the highest rate is 27.49 per cent from Latitude Finance.
The average credit card fee is $162 per year.
“If the numbers don’t add up, make the switch to an option that’s going to help your finances, rather than hinder them,” Tindall said.
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