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Wizard slammed over credit rate hike -

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ELEANOR HALL: Just days after providing some mortgage relief, one of Australia's big home lenders
is being savaged by consumer groups for raising its credit card rates.

Wizard Home Loans was one of the first lenders to drop its home lending rate, ahead of the Reserve
Bank's cut of 25 basis points yesterday.

But now it's become one of the first lenders to lift its credit card charges.

It's boosted the interest rate on one of its popular cards by nearly three per cent; to just under
18.5 per cent.

As Tanya Nolan reports.

TANYA NOLAN: Here was the sweetener issued by Wizard Home Loans chairman Mark Bouris on Sunday.

MARK BOURIS: Our signal today is reduce the same as Reserve Bank, and with Reserve Bank, re-couple.

TANYA NOLAN: Wizard's move to reduce its variable home loan rate by a quarter of a per cent, ahead
of the Reserve Bank's cut, was the first by a lender to reduce mortgage rates in nearly seven
years. And it was described by Mr Bouris as a signal of the return of competition to the banking

But today Mark Bouris isn't talking about his company's latest announcement, the move to slug new
customers nearly three per cent extra in interest on its Clear Advantage Mastercard.

Choice spokesman Christopher Zinn says Wizard's customers would be confused at best.

CHRISTOPHER ZINN: Customers of that financial institution would have to be confused. It certainly
seems like a slight of hand coming from a company that prides itself on its magical name.

TANYA NOLAN: In a statement, the company explains the move this way:

EXCERPT OF STATEMENT: The increase is necessary to ensure the Clear Advantage Mastercard can
continue to offer a nil annual fee as well as no fees for cash advances or overseas purchases and
remain 55 days interest free.

TANYA NOLAN: At just under 18.5 per cent, this credit card is competitive, sitting just below the
Reserve Bank's standard credit card indicator rate of 19.65 per cent.

It's also lower than the more popular cards offered by many of the big banks which have average
interest rates at just over 20 per cent.

But you can find cheaper, and Stephen Anderson says you should. He heads research at the online
financial research comparison website InfoChoice. He says with over 200 credit cards on the market,
there are many that offer interest rates as low as 11 or 12 per cent.

Mr Anderson says his modelling shows credit card interest has nearly doubled over the past year,
compared to increases in the official cash rate.

STEPHEN ANDERSON: Wizard's move to increase their credit card interest rate is not completely
uncommon in the market, and looking at some data that InfoChoice has pulled out of its own database
is the average increase on a selection of credit cards has been just on 2.1 per cent since August
of last year to today.

Compare that with the Reserve Bank increases of just on one per cent and the additional 50 to 60
basis points or 0.5 to 0.6 of a per cent added on by the banks and their mortgages.

TANYA NOLAN: It's likely that those people who found some relief in yesterday's cut in the official
cash rate will be hit by any increases in credit card interest.

In its July report on mortgage trends, Genworth Financial says nearly 60 per cent of adult
Australians have credit card debt compared to the nearly 40 per cent who have mortgages.

The company says 18 per cent of people have a personal loan, 16 per cent a car loan and 11 per cent
have a HECS debt.

Choice's Christopher Zinn says consumers would benefit more if the same scrutiny given to mortgage
rates was given to credit cards and other loans.

CHRISTOPHER ZINN: They really go up as opposed to down, with really no reference to the RBA or
anything else.

There's something like $46-billion on the countries credit cards at the moment, that's a record,
something like over $3,000 per man, woman and child, a lot of that interest is being paid on.

So look, it's a substantial matter of public interest what interest rates are for cards, and
basically the banks and other financial institutions are really charging top dollar for many of

TANYA NOLAN: It could be argued though that consumers have more of a choice on credit cards, and
which ones they choose to use and whether they choose to use them at all, and with discretion. So
in a way isn't it better to put the heavier impost on credit card rather than the home loan?

CHRISTOPHER ZINN: Look there's no doubt with credit cards, you do have, or hopefully most people
have the choice to avoid it if possible, but really products should be priced in a way that
reflects the costs of those institutions, and there shouldn't be excessive cross-subsidisation of
one product to another.

And really, I mean the other banks so far as we know, haven't put up their credit card rates to
allegedly subsidise any reduction in home loans. So Wizard's going to have pull a pretty good
explanation out of a hat on this one.

ELEANOR HALL: That's Choice spokesman Christopher Zinn, ending that report from Tanya Nolan.