The Australian
Consumers' Association investigated 15 card issuers and found eight
of them used "tricky" methods to maximise interest income.
These included
calculating daily interest on the full value of a transaction, even
if some of it had been repaid on time, charging interest back to
the original purchase or posting date, and not offering an
interest-free period for new purchases if debt had been carried
forward from the previous month.
"Some banks are
being fair, but many are just being mean and tricky," said the
association's spokeswoman, Indira Naidoo.
The most expensive
methods for calculating charges could more than double some
interest bills, the report said. In some cases a card holder with
an interest rate of 10 per cent could pay more interest than on an
18 per cent card on exactly the same transaction.
Ms Naidoo said two
mathematicians and an economist examined credit card interest
payments for six months to come up with the comparisons.
They discovered 10
different methods of calculating and treating repayments among the
15 card issuers reviewed.
The banks and
other card issuers surveyed could not explain why their methods of
charging interest differed. The findings showed it was virtually
impossible for a consumer to work out how interest was being
charged. Banks' terms and conditions rarely gave clear
explanations, the report said.
"We want a uniform
system and a much fairer system for credit cards," Ms Naidoo
said.
ANZ, National
Australia Bank and St George fell in to the association's "mean"
category, as did the low-fee issuers Aussie and BankWest.
Commonwealth and Westpac were deemed "OK to fair". Cards of the
Bank of Queensland and the NSW Teachers Credit Union were ranked
the fairest. Spokeswomen for NAB and St George did not respond to
the specific allegations.
