Banks such as Westpac, NAB, ANZ, and Commonwealth have employed deliberate delaying tactics to arbitrarily make the process of cancelling a credit card more difficult. Australian banks are yet to meaningfully respond to an industry-led report that found there is a serious need for reform in how credit cards are handled, and as we move closer to a cashless society, it’s becoming more and more important.
Choice is reporting that these delaying tactics include forcing customers to wait as long as five days, send documents via snail mail, or speak to someone on the phone or at a branch so the bank (or a third-party company specialising in retention) can try to keep them.
NAB had said it had implemented online cancellations, but during a parliamentary inquiry it was revealed that part of its process included calling and messaging the customer. The only bank to explicitly commit to instant, online cancellations so far is Commonwealth, though this change is claimed to be coming “later in 2017”.
Keeping a credit card active can rack up yearly fees, even if you haven’t used it — and that’s just one more aspect of a larger scheme the banks have been running. The above-mentioned industry-led report from Phil Khoury made 99 recommendations to make things fairer for consumers, including cancellations, payment of overdue amounts, and more.
Federal shadow minister for small business and financial services Katy Gallagher recently wrote in the Sydney Morning Herald about the difficulty of cancelling a credit card, as well as the tricks banks use to send unsolicited offers to increase credit limits, and tricky practices regarding interest:
Most Australians expect that, if you spend $1000 on your credit card for the billing period, and you pay back $800 by the due date, you should only need to pay interest on the $200. That seems reasonable, because that’s the amount that’s overdue. But often that’s not what happens. What many customers don’t know is that, when they don’t repay the full amount on time, many banks charge interest on the whole $1000, even though the $800 was paid on time.
The Australian Bankers’ Association responded with a tone-deaf equivalent of “Nah, it’s not that bad, really”. Just yesterday, the ABA responded to a report from Stephen Sedgwick about the “sales culture” at the banks, and how employees are financially rewarded for gaining and retaining customers on credit schemes, regardless of what’s best for the customer. The response quotes the recommendations several times, and even hails them, but doesn’t once commit to a specific action.
Happily, the inaction on behalf of the banks is nudging a slow-moving, yet seemingly willing, government to act on the issue — though it was almost a year ago that the government admitted that actions will need to be taken.