ARA calls for card rate cuts

NATIONAL: In a bid to boost retail trade, peak body the Australian Retailers Association (ARA) has urged Australian banks to pass on the Reserve Bank of Australia (RBA)'s recent interest rate cuts to credit cards. ARA executive director Richard Evans said business owners including retailers had reworked their business models during the down turn, adding it was "high time the banks did the same and did more to lower credit card rates."

December 2's interest rate cut of 1.0 percentage point (the fourth cut in as many months) was great news for mortgage holders but meant nothing for rest of the population still struggling with growing credit card debt.

"The RBA and the Rudd government are doing their jobs cutting interest rates and implementing measures to stimulate spending. It's time the banks do their job by passing on official interest rate cuts - not just to home owners - but to working families paying rent and to small business owners who use credit to fund their cash flows.

"The obvious link between households facing financial stress and mounting credit card debt is continually being ignored by banks. And the story on [December 2] wasn't any different - with only one of the big four banks appearing to have announced any reduction in credit card interest rates.

"Retailers expect strong growth to return by September 2009, but the rest of the economy lags three to six months behind in the retail sector cycle. The banks need to move quickly in this tough economic time and work with the rest of the community towards economic recovery.

"If banks can't quickly reduce credit rates, they should be looking at introducing new products into the market giving consumers low interest rate credit options.

"The RBA's decision to cut interest rates yet again indicates our leading financial regulators are listening to retailers hard hit by months of reduced consumer demand. But now we urgently require the interest rates on credit cards to be lowered," Evans said.