Are banks running a credit card scam? Labor Government says yes
Credit Card Scam: Australian Banks have been having a field day at consumers expense. Fees charges and interest rates are a free for all, and a no go area for Governments according to the Big Four Banks.
But in my view the banks having been running their own credit card scam. That view now seems to be shared by the Australia Labor Government.
Labor Promises Credit Card fees changes
Labor has promised changes for the better for those consumers using credit cards [and isn't that all of us?]. But this is breaking the Golden Rule as bankers see it. [The Golden rule: He who has the Gold [or money] makes all the rules.]
The Credit Card gravy train
Australia’s banks have been charging over the top interest rates with the excuse that they are risky. That’s one thing.
Then when the official interest rates were reduced, they did not reduce these high rates on credit cards. [The rate difference will be good for our mega profits. Thanks RBA for that say the banks.]
On top of that they have been slugging the poor consumer extra fees for going over their credit limit on their credit card. But wasn’t that the banks fault in allowing that transaction, and isn’t that the banks’ excuse for high credit card interest rates in the first place?
Obviously this would not happen if rates were set at a more reasonable level, so they get you a second time because they got you the first time.
They could of course decline the over the limit spending on your credit card, but that would mean losing two profit opportunities.
This is what Labor wants to prevent the banks from doing with credit card fees. Pretty reasonable I would have thought. But not so say the greedy banks.
Yet this is the same argument I had with my Bank, the ANZ a couple of years a go. The outcome was that they repaid the honor fees. My argument was that the fees were charged first [before the transaction was actually made, and on the day that money was in the account to cover, and that but for the fact the charges were made, the account was positive.
I then had a fight to get them to ensure that they never allow me to draw money on that account if there were no funds to cover. Whilst this was an EFTPOS card, not a credit card, the same logic applies.
The Banks Defend their Credit Card Scam
The banks will argue that its not their fault that consumers overrun their credit limits. But that is nonsense in my opinion.
If banks had to pay the consumer $30 every time the consumer went over the credit limit on their credit card, it would never happen. It happens because the banks make a lot of money on this, so why would they stop the credit card gravy train?
They want to blame credit card default on unemployment, illness and family breakdown, but illness and family breakdown can be the result of unmanaged debt. The Banks credit card policies have a lot to answer for, and I congratulate the Labor Government on its following the Greens lead on this.
