March 22, 2010
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News: Australia's Westpac Ripping Off Customers
A recent report showed that some of Australia's credit card customers are paying more interest than they should be. According to the report, Westpac, Australia's largest bank is ripping off consumers. The report comes in the wake of controversy over Westpac's decision to charge interest on top of interest and other credit card fees. Standing in defense of Australian residents, Federal Treasurer Wayne Swan stated that the bank's actions were driving customers away. In December, 2008, Westpac became the largest bank in Australia after taking over the St. George bank. The merger increased the bank's customer base to over 10 million customers. Apparently the merger has gone to the big bank's head. Swan says the bank has become a "serial offender" in taking advantage of its credit card customers.
It is estimated that Westpac currently earns nearly $18 million a day in profit and yet has notified cardholders that beginning in June, interest will be charged on existing interest charges and fees on their credit card account. Jane Counsel, a spokesperson for Westpac, says the bank's double dipping is "in line with industry standard." However, Swan says other credit card companies "don't charge interest on fees." Not long ago, Westpac came under fire for raising interest rates significantly higher than the interest rate it was paying to the Reserve Bank.
Despite the fact that Westpac claims they are simply aligning the bank's credit card interest policies with the industry standards, banks from other countries like the U.S., the U.K., and Canada do not charge interest on top of interest and fees. The Boston Consulting Group named Westpac the world's most profitable bank after the bank announced that it had realized $1.6 billion during fourth quarter 2009; a 33 percent increase from the same time a year prior. With such an extraordinary increase, cardholders are asking "why?" Customers are happy over the bank's double dipping and most likely many be taking their business elsewhere. A study by the consumer group Choice, indicated that other banks offering cards that do not double dip are the Bendigo Bank, Heritage Building Society and Teachers Credit Union. Not only that, the study showed that these banks were up to 80 per cent less expensive than other card offered.