Australia’s consumer watchdog has condemned Westpac’s decision to make customers pay interest on their interest.
The bank has announced that customers will be charged interest on credit card fees and interest charges starting from June.
It has defended the move, saying it will not apply to customers who pay off their credit cards.
But Christopher Zinn from Choice says the bank is aware many people will not be able to do that.
“They know that approximately a third of cardholders don’t pay off the outstanding balance at the end of the month,” he said.
“So, in fact, they are hit by this amount. And in fact, if all customers really did pay off that outstanding balance, then Westpac and many other card providers would pull out of credit cards because they wouldn’t be a buck in it.”
But the Australian Bankers Association’s chief executive, Steven Munchenberg, says Westpac is not acting unfairly.
“When you save money in a bank, you actually earn interest on interest, so this is in many ways the other side of the equation,” he said.
“All Westpac is doing is just saying that they will charge you interest on the amount of money you owe the bank.”