• Most credit card rates remain unchanged following 5 RBA cash rate cuts
• Gap between credit card rates and RBA cash rate hits 14% - biggest ever recorded by RateCity
• Credit card holders can beat rate hikes and switch to a better deal!

Credit card providers are "cashing in" on the Reserve Bank's rate cuts, following a new study by Australia's leading financial comparison website RateCity.com.au (RateCity), which found most credit cards haven't passed on any of the rate reductions over the past year.

Despite improved funding costs and the Reserve Bank dropping the cash rate by 150 basis points since November 2011, only 25 percent of all personal credit cards in RateCity's database (of about 200 cards) lowered their rates since November, by an average of 44 basis points.

Not one credit card in RateCity's database passed on the full 150 basis point cash rate reduction from the Reserve Bank. This is despite the majority (84 percent) of credit cards lifting their rates within two months of the last RBA rate rise in November 2010.

The average personal credit card purchase rate is virtually unchanged at 17.26 percent since rates began to fall in November 2011. RateCity also found 12 credit cards that increased their purchase rates by up to 204 basis points over the same period.

Michelle Hutchison, Spokesperson for RateCity, said many credit card providers are keeping their rates high to try to maintain their profits in a low credit growth environment.

"There's no doubt that credit card providers are under greater pressure to perform and maintain their profits as many card holders are pulling back their card use and paying down their debts.

"The latest figures from the Reserve Bank analysed by RateCity show that the total balance accruing interest has dropped for the fourth consecutive month while card holders have paid back the same if not more than what they spent for the past six consecutive months.

"It's great to see card holders being more responsible for their credit card debts but balances are still incredibly high for many card holders and there are many Australians who are paying more interest than they need to be."

Mrs Hutchison said credit card holders can push providers to be more competitive by comparing cards and switching to better deals.

"The gap between the cash rate and the average credit card purchase rate has been increasing to a point where it has almost doubled compared to five years ago - from 8.43 percentage points to 14.01 percentage points. This is worth an estimated $7 billion in extra interest charged over that time.

"While the majority of credit cards have kept their rates the same over the past year, there are some providers pushing harder with competitive deals. For instance, the lowest credit card rates in RateCity's database fell to 9.50 percent by Community First Credit Union.

"Credit card providers have gotten away with high interest rates because card holders have allowed them to. Card holders have the power to change the credit card market and save money on interest by simply comparing credit cards at RateCity.com.au and switching to a better value deal," said Mrs Hutchison.

RateCity's top credit cards and their purchase rates

Community First Credit Union, Low Rate Visa Credit Card - 9.50% Greater Building Society, Credit Card - 10.25% Credit Union SA, Visa Credit Card - 10.49% SCU, Low Rate Visa Credit Card - 10.49% Bank MECU, Low Rate Visa Credit Card - 10.49%

Source: RateCity.com.au, based on lowest purchase rates, excludes intro rates, available to the general public.

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For Further information please contact:

Michelle Hutchison

PR Manager & Spokesperson

Tel: +61 2 8917 8005

Mob: +61 403 192 994

Email: michelle.hutchison@ratecity.com.au

About RateCity

RateCity (www.ratecity.com.au) is Australia's leading financial comparison website, where Australians can easily search, compare and apply for over 13,000 financial products - from credit cards to home loans to car insurance - from over 250 institutions. Our job is to take the hassle out of finding the right financial products online - saving our users both money and time.

RateCity is a private company with an AFS Licence (AFSL: 316 710), powered by CANSTAR, in partnership with Mi9.

Disclaimer

To the extent that any RateCity Pty Limited data, ratings or commentary constitutes general advice, this advice has been prepared by RateCity Pty Limited ABN 12 122 743 542 AFSL 316710 and does not take into account your individual investment objectives, financial circumstances or needs. Information provided on and available from this site does not constitute financial, taxation or other professional advice and should not be relied upon as such. RateCity Pty Limited recommends that, before you make any financial decision, you seek professional advice from a suitably qualified adviser.

Product Disclosure Statement relating to the product should also be obtained and considered before any decision about whether to acquire the product.

Please refer to RateCity's FSG for more information.