Warnings of a credit card late fee ‘free-for-all’ after High Court rules the practice is acceptable

WARNINGS of a free-for-all by banks that slug credit card users with hefty late fees have emerged, after a landmark High Court decision.

The nation’s highest court of appeal yesterday dismissed a six-year class action by ANZ customers, who argued the bank charged excessive fees for late payments on credit cards totalling $75 million in a single year.

Consumer advocates are now calling for new legislation to stop the “fee frenzy”, warning that banks will now have a free pass to charge as much as they like.

Late payment fees charged by Australian banks range from $15 up to $35, but there are bargains to be found; scroll down to compare the full list of credit cards.

Consumer Action Law Centre chief executive Gerard Brody said the decision allowed the banks to continue charging exorbitant penalty fees, calling on the government to legislate against the gouging.

“The fees charged by banks and other businesses need to actually reflect the cost and not be used to add to their bottom line,” Mr Brody said.

“Late credit card fees as high as $35 are ridiculous and bear no resemblance to what a late payment actually costs a bank.”

Alan Kirkland, chief executive of consumer group Choice, said the banks were charging out-of-proportion fees while posting record profits.

“This disappointing decision shows that our laws are not able to protect consumers from the powerful banking sector,” Mr Kirkland said. “With this decision, we expect the banks to continue their fee frenzy.” The average household pays about $468 a year in bank fees, or $9 a week.

The law firm that took the ANZ case to the High Court — and has similar class actions against the other major banks — also called for law reform.

Maurice Blackburn national head of class actions Andrew Watson said the ruling meant banking customers had no effective means to challenge bank fees which bear no relationship to their real costs.

“The law should recognise the reality of the banking transaction which is that customers ought not to be levied fees which bear no relationship to actual costs,” he said.

Mr Brody said with Australian consumer law under review, the ruling demonstrated why unfair contract terms needed to be a focus of change.

The ANZ class action argued that late fees of up to $35 were an exorbitant penalty that went far beyond the losses suffered by the bank as a result of late payments, which one expert witness estimated at $2.60. It looked at 2.4 million late fees worth $75 million in the 2008-09 financial year.

Herbert Smith Freehills partner Cameron Hanson said the court was not prepared to use consumer protection provisions to rewrite a contract freely entered into by a customer who knew the fees would be payable.

“The court accepted that companies have a legitimate interest in earning a profit and that fees and charges can be one of the ways in which they earn that profit,” Mr Hanson said.

“The court was also concerned that customers who pay on time are not effectively forced to cross-subsidise those customers who pay late.”

ANZ reduced its fee from $35 to $20 in December 2009, the year before Maurice Blackburn filed its class action.

Chief executive Fred Ohlsson has dismissed the predictions of a fee hike and opposes legislative changes.

“We have no plans to raise our fees at ANZ,” Mr Ohlsson told Fairfax Media.

CREDIT CARD LATE PAYMENT FEES

$25 — $35

B&E Personal Banking Visa Credit Card $35

Jetstar MasterCard $35

Jetstar Platinum MasterCard $35

Macquarie Bank Black Card $35

Macquarie Bank Hilton HHonors Platinum Card $35

Macquarie Bank Platinum Card $35

Macquarie Bank RateSaver Card $35

Woolworths Everyday Platinum Credit Card $35

Woolworths Qantas Platinum Credit Card $35

American Express David Jones Card $30

American Express David Jones Platinum Card $30

American Express Essential Credit Card $30

American Express Low Rate Credit Card $30

American Express Platinum Edge Credit Card $30

American Express Qantas Discovery Card $30

American Express Qantas Premium Card $30

American Express Qantas Ultimate Card $30

American Express Velocity Escape Card $30

American Express Velocity Platinum Card $30

Diners Club Australia Frequent Flyer Dual Card $30

Diners Club Australia Frequent Flyers Club Card $30

Diners Club Australia Personal Card $30

Diners Club Australia Personal Dual Card $30

HSBC Credit Card $30

HSBC Platinum Credit Card $30

HSBC Platinum Qantas Credit Card $30

SERVICE ONE Alliance Bank Home Loan Visa $30

SERVICE ONE Alliance Bank Visa $30

Bankwest Breeze Gold MasterCard $25

Bankwest Breeze MasterCard $25

Bankwest Breeze Platinum MasterCard $25

Bankwest More Gold MasterCard $25

Bankwest More MasterCard $25

Bankwest More Platinum MasterCard $25

Bankwest Qantas Classic MasterCard $25

Bankwest Qantas Gold MasterCard $25

Bankwest Qantas Platinum MasterCard $25

Bankwest Zero Gold MasterCard $25

Bankwest Zero MasterCard $25

Bankwest Zero Platinum MasterCard $25

Coastline Credit Union Visa Rewarder $25

Community First CU Low Rate Visa Cred Card $25

Community First CU McGrath Pink Visa Card $25

ECU Australia Low Rate Visa Credit Card $25

SCU Low Rate Visa Credit Card $25

$15-$20

ANZ Frequent Flyer $20

ANZ Frequent Flyer Black $20

ANZ Frequent Flyer Platinum $20

ANZ Low Rate $20

ANZ Low Rate Platinum $20

ANZ Rewards $20

ANZ Rewards Black $20

ANZ Rewards Platinum $20

Coles Low Rate Mastercard $20

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Coles No Annual Fee MasterCard $20

Coles No Annual Fee Platinum MasterCard $20

Coles Rewards MasterCard $20

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Commonwealth Bank Diamond Awards $20

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Commonwealth Bank Low Fee Gold MasterCard $20

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Commonwealth Bank Low Rate Gold MasterCard $20

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Commonwealth Bank Platinum Awards $20

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Heritage Bank Classic $20

Heritage Bank Gold Low Rate $20

Heritage Bank Platinum $20

Hume Bank Clear $20

Hume Bank Value $20

Intech Credit Union Titanium Visa 55 $20

Latitude Financial Services 28 Degrees Platinum MasterCard $20

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Latitude Financial Services GO MasterCard $20

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Myer Visa Card $20

Victoria Teachers Mutual Bank Visa Classic Credit Card $20

Victoria Teachers Mutual Bank Visa Platinum Credit Card $20

Bank Australia Low Rate Visa CreditCard $15

Bank Australia Visa Credit Card $15

Bendigo Bank Basic Black MasterCard $15

Bendigo Bank Basic Black Visa $15

Bendigo Bank Platinum Visa $15

Bendigo Bank Ready Red MasterCard $15

Bendigo Bank Ready Red Visa $15

Bendigo Bank RSPCA Rescue Rewards $15

Bendigo Bank RSPCA Rescue Visa $15

Encompass Credit Union Visa Credit Card $15

$10 OR LESS

Auswide Bank Low Rate MasterCard $10

Auswide Bank Platinum MasterCard $10

Bank of Sydney Visa Classic $10

Bank of Sydney Visa Platinum $10

BOQ Blue Visa $10

BOQ Low Rate Visa Card $10

BOQ Platinum Visa $10

Citi Classic Card $10

Citi Clear Platinum Visa $10

Citi Emirates World MasterCard $10

Citi Platinum $10

Citi Prestige $10

Citi Qantas Signature $10

Citi Signature Rewards $10

CU MasterCard — Generic Low Rate MasterCard $10

CU MasterCard — Generic Platinum MasterCard $10

CUA Low Rate MasterCard $10

CUA Platinum MasterCard $10

IMB Low Rate MasterCard $10

IMB Platinum MasterCard $10

ME Bank frank credit card $10

MyState Low Rate MasterCard $10

MyState Platinum MasterCard $10

Police Bank Visa Credit Card $10

QT Mutual Bank Low Rate MasterCard $10

QT Mutual Bank Platinum MyCard $10

Queenslanders CU Low Rate MyCard $10

Queenslanders CU Platinum MyCard $10

Suncorp Bank Gold Card $10

Suncorp Bank Platinum Card $10

Suncorp Bank Standard Card $10

Teachers Mutual Bank Teachers Credit Card $10

UniBank Visa Credit Card $10

Virgin Money No Annual Fee Credit Card $10

Virgin Money Virgin Aust Velocity Flyer Card $10

Virgin Money VirginAust Velocity High Flyer Card $10

Your Credit Union Low Rate MasterCard $10

Your Credit Union Platinum MasterCard $10

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Bank of Melbourne Amplify Platinum $9

Bank of Melbourne Amplify Signature $9

Bank of Melbourne No Annual Fee Visa $9

Bank of Melbourne Vertigo Platinum $9

Bank of Melbourne Vertigo Visa $9

BankSA Amplify Classic $9

BankSA Amplify Platinum $9

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BankSA No Annual Fee Visa $9

BankSA Vertigo Platinum $9

BankSA Vertigo Visa $9

BankVic Visa Gold credit card $9

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Holiday Coast CU Light Visa Credit Card $9

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Westpac Low Rate Visa Card $9

Westpac Student Visa Card $9

Qld Police Credit Union Bluey Card $8

Qld Police Credit Union Bluey Rewarder Card $8

ANZ Balance Visa $6

Big Sky Building Society Cash Rewards Visa Card $5

Big Sky Building Society Low Rate Visa Card $5

Newcastle Permanent Value+ Credit Card $5

P&N Bank & Visa Platinum $5

P&N Bank Classic Visa $5

P&N Bank Visa Platinum $5

NO LATE FEE

Australian Military Bank Low Rate Visa Card

Bank Australia Platinum Rewards Visa Credit Card

bcu Classic Visa Card

bcu Rewarder Visa Card

Beyond Bank Low Rate Visa Credit Card

Citi Simplicity

First Option Credit Union Cash Rewards Visa Credit Card

First Option Credit Union Low Rate Visa Credit Card

First Option Credit Union Smart Start Credit Card (18-24yrs)

G&C Mutual Bank Low Rate Visa Credit Card

G&C Mutual Bank Platinum Visa Credit Card

Greater Building Society Credit Card

Hunter United Visa Credit Card

Hunter United Visa Credit Card — Home Loan Bwrs

Macquarie Credit Union Visa Credit Card

Northern Inland CU Visa Credit Card

People’s Choice Credit Union Visa Credit Card

Quay Credit Union Visa Credit Card

Qudos Bank Visa Platinum Credit Card

Select Credit Union Visa Credit Card

Summerland CU Low Rate Card

Summerland CU Rewards Card

Woolworths Employees CU Visa Credit Card

 

 

[source :-news]