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Tuesday, 3 February 2009
Page: 42

Mr HARTSUYKER (5:02 PM) —My question is to the Prime Minister. Will the Prime Minister advise the House what decisive action the government is taking to ensure that today’s one per cent interest rate reduction is passed on by the banks to credit card customers, who are currently paying around 18 per cent on their credit cards?

Mr RUDD (Prime Minister) —I thank the honourable member for his question because this is a serious matter for all those who hold credit cards. I am advised that Canstar Cannex data indicates there are about 342 credit cards on the market provided by some 78 different providers. Credit cards offer interest rates, I am advised, ranging between seven per cent and 21 per cent, with interest-free periods ranging from zero to 62 days. There has been, furthermore, an explosion in credit card debt. In the period that the previous government was in office it increased by 500 per cent from $6.6 billion, where it stood in 1996, to $41.9 billion, which is where it stood in 2007.

The impact of interest rates on credit card holders is of deep concern to the government. I say to the banks, in relation to both credit card interest rates as well as interest rates imposed on small-business lenders, that we would expect the banks to provide maximum pass-through of the benefit given by official interest rate cuts to the entire range of their customers, and we will be continuing to engage the banks on this matter.