Big Banks find another way to rip us off
June 16th 2009 00:59
By Jason Bryce
Three of the big four Australian banks are ripping off customers they have lured from their competitors with the traps in their tricky post christmas zero interest rate credit card balance transfer offers. Often these offers come 'pre-approved' unsolicited in the mail in January and February.
"I think thousands of people who took up zero rate transfer offers after Christmas are in for a big shock when the promotional period runs out and their balance suddenly starts attracting 20 per cent interest," says Rohan Gamble, chief executive of banking comparison site mozo.com.au.
"The prime season for marketing these offers is in January (and) February, so now through to July and August there are going to be a lot of people coming off the introductory rates and most of them simply don't know they are going to be slugged 20 per cent.
"A card from one of the big four banks, offering a zero rate on balance transfers for six months, reverts to an interest rate of 19.99 per cent for the remaining balance, despite the card being a low-rate card.
"Someone who transferred $3000 debt to that card and only paid the minimum repayments during the balance transfer period would still owe more than $2600 after six months," Mr Gamble says.
At 19.99 per cent interest, it would take more than 12 years to repay the debt and incur more than $1800 in fees and interest.
"Credit card balance transfer offers carry a huge sting in the tail for the unwary," he says. "We are urging Australians to check the interest rate that applies to unpaid balance transfers once the introductory offer ends.
"We are very concerned that credit card holders are being trapped into paying sky high interest on balance transfers, when they thought they were doing the right thing by getting a so-called 'low rate' credit card."
Three of the big four Australian banks are ripping off customers they have lured from their competitors with the traps in their tricky post christmas zero interest rate credit card balance transfer offers. Often these offers come 'pre-approved' unsolicited in the mail in January and February.
"I think thousands of people who took up zero rate transfer offers after Christmas are in for a big shock when the promotional period runs out and their balance suddenly starts attracting 20 per cent interest," says Rohan Gamble, chief executive of banking comparison site mozo.com.au.
"The prime season for marketing these offers is in January (and) February, so now through to July and August there are going to be a lot of people coming off the introductory rates and most of them simply don't know they are going to be slugged 20 per cent.
"A card from one of the big four banks, offering a zero rate on balance transfers for six months, reverts to an interest rate of 19.99 per cent for the remaining balance, despite the card being a low-rate card.
"Someone who transferred $3000 debt to that card and only paid the minimum repayments during the balance transfer period would still owe more than $2600 after six months," Mr Gamble says.
At 19.99 per cent interest, it would take more than 12 years to repay the debt and incur more than $1800 in fees and interest.
"Credit card balance transfer offers carry a huge sting in the tail for the unwary," he says. "We are urging Australians to check the interest rate that applies to unpaid balance transfers once the introductory offer ends.
"We are very concerned that credit card holders are being trapped into paying sky high interest on balance transfers, when they thought they were doing the right thing by getting a so-called 'low rate' credit card."
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