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Retailers call for urgent credit card rate cuts

Peak retail industry body the Australian Retailers Association (ARA) said Australian banks are stalling economic recovery by not doing enough to pass on the Reserve Bank of Australia’s (RBA) interest rate cuts to credit cards.

ARA Executive Director Richard Evans said Tuesday'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 Tuesday wasn't any different - with only one of the big four banks appearing to have announced any reduction in credit card interest rates. 

 "Business owners including retailers have all been forced to rework their business models during this tough economic time and it's high time the banks did the same and did more to lower credit card 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 yesterday 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.

For over 104 years, the Australian Retailers Association (ARA) has been the peak industry body in Australia's $292 billion retail sector which employs over 1.2 million people. As an incorporated employer body under the Workplace Relations Act and with a range of member services including business consulting, policy development, advocacy and education, the ARA promotes and protects over 5000 independent and national retailers throughout Australia. Visit www.retail.org.au or call 1300 368 041.

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