March 24, 2010
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News: Australia's New Credit Card Laws May Be Deficient
Australia's lawmakers have followed suit with U.S. lawmakers and President Barak Obama as they implement new rules and regulations that are designed to stop the deceptive and unfair practices of credit card companies and banks. With hopes of protecting Australians, the new national consumer law prohibits onerous fees and charges on credit cardholders. The law comes just after the nation's number one bank, Westpac, released statements pertaining to its double dipping interest policy of charging interest on top of interest. Under the terms of the new law, such practices and other similar credit card charges will be required to fail a fairness test to be tagged as an unfair practice.
The new law which is scheduled to become effective on January 1 limits credit card companies from charging certain fees that are considered to be a replacement of the company's abilities to raise interest rates. Consumers will also be able to challenge any contract term that they consider to be unfair. Experts are advising Westpac credit card customers to explore their options and look for a better deal. Popular opinion is that Westpac's double dipping practice is unfair while the bank maintains that they are simply pulling their policies in alignment with the national standards.
Australia's credit card market is not very competitive; however, there are three financial institutions that do not double dip by charging interest on top of interest; these include Teachers Credit Union, Heritage Building Society, and Bendigo Bank. The consumer advocate group Choice is advising consumers to check these options out to see if they qualify for a card with one of the three. Furthermore, consumers will most likely find interest rates to be less than those offered by Westpac. Despite the outrage over Westpac's double dipping policy, there are those who believe the bank is within ethical standards. Defending the bank's right to charge interest on top of interest is Steven Munchenberg, the head of the Australian Bankers Association who says the practice is the same as a bank paying interest on top of interest for savings accounts.