Fegan defends credit card pricing

St George Bank chief executive Paul Fegan yesterday defended the bank's decision not to pass on any of the two recent Reserve Bank rate cuts to its consumer credit card holders.

Fegan rejected the suggestion that the bank was being mean and doing nothing to help consumers struggling with credit card debt.

Consumer debt was one area where the bank recorded a substantial increase in bad debt expense in the 2007/08 financial year, with provisions on the consumer credit portfolio rising from $98 million to $116 million.

Fegan said card rates were priced appropriately for risk.

Figures supplied by InfoChoice show that purchase rates on St George's Gold Low Rate, No Annual Fee, Platinum, Starts Low Stays Low and Vertigo cards rose by between 100 and 290 basis points in the nine months from July last year to March this year, when the last of the RBA increases was announced.

Cash advance rates rose by between 100 and 526 basis points over the same period. The cash advance rate on the Gold Low Rate card rose from 12.99 to 18.25 per cent.

The bank has not cut rates on any of those cards since then, despite official rates coming down 125 basis points in the past two months.

St George is not alone. Hardly any lender has cut interest rates on any credit card product over the last two months.