January 25, 2010
-
News: Choice Names Unfair Lenders
A recent study conducted by Choice, a consumer advocate group in Australia, discovered that several credit card companies charged unfair and abusive fees. Choice boasts to protect and help consumers through confusing changes in law and industry practices to bring clarity. The agency says the conditions of the fees are hidden in the credit card's terms and is unfairly penalizing customers. The group's study looked at the practices of 20 credit card companies. The results revealed that the companies were not consistent on the way they charged interest; it differed on how they advertised the card's interest rate compared to how they stopped and started charging and how they applied interest-free days.
According to the study, consumers can have more than one credit card with the same interest rate and yet end up paying nearly twice as much interest on one than the other if they are even one day late in payment. If a payment is late, some companies will backdate interest to the original purchase date for up to 55 days. Some companies will even backdate interest if the consumer sends in a partial payment; as much as one dollar short can generate large fines and excessive interest. Christopher Azine, a spokesperson for Choice, said that the "tricks of the trade" make it difficult for consumers to determine which credit card is the best choice.
The Choice report named American Express, Bankwest, Commonwealth Bank, ANZ and Westpac were named as the most abusive. Credit card companies that were listed as "fairer" were Bendigo Bank, Heritage Building Society, Teachers Credit Union, and GE. Azine said that Choice is calling upon card issuers to develop a standard set of rules in assessing interest and fees so that consumers can better understand the details. According to Azine, it would not be difficult to design such a system.