Credit card traps mount up
Credit card holders are being lured into ever-expanding debt traps with banks cutting the minimum required monthly repayment and lifting interest rates to as on some cards. Minimum payments have been cut from over 3 per cent of the outstanding balance to as low as 1.5 per cent over the past three years. This means those only paying back the mininum each month will take much longer to pay off their debt and incur more interest along the way. A decade ago, minimum repayments were as high as 5 per cent. In addition to fees and high interest rates, card issuers also charge late payment fees on top of interest which the Consumer Law Centre says may be illegal. While banks claim that lower repayments help struggling customers and offer flexibility, consumers' groups say it simply means people pay more interest, adding millions to the total cost of consumer credit.