Movements on credit card interest rates by the big four banks over two years show banks have kept 85 per cent of the net benefit gained from the Reserve Bank of Australia’s (RBA) interest rate cuts.

By March 1 the net impact of the RBA’s movements in the official cash rate over the last two years was a 3.5 per cent decline from the cycle’s high of 7.25 per cent in March 2008.

While banks passed on the majority of the RBA’s interest rate cuts to home loan borrowers, data from financial comparison website RateCity shows the big four kept 85 per cent, on average, of the net gains of the interest rate movements from credit card borrowers.

A comparison of movements in interest rates charged on both standard and low-rate personal credit cards over the past two years showed the net impact of rate hikes and cuts was an average drop of just 0.5 per cent.

On average, banks kept around 85 per cent of the RBA’s total rate cuts of 3.5 percentage points, with customers of three of the big four only slightly better off.

Interest rate movements made by Westpac, ANZ Banking Group (ANZ) and Commonwealth Bank of Australia (CBA) on standard credit cards resulted in overall declines of just 0.51 per cent, 0.5 per cent and 0.25 per cent respectively.

By March 1, the interest rates charged by the three stood at 18.59 per cent, 18.24 per cent, and 19.74 per cent respectively.

But despite promising “more give, less take”, the net impact of movements made by National Australia Bank (NAB) over two years show its customers are now worse off.

The moves by NAB resulted in an overall rise of 0.14 per cent on its standard credit cards according to RateCity’s data.

By March 1 NAB customers were paying an interest rate of 18.74 per cent, compared to 18.6 per cent two years ago, with NAB having hiked the rate by 0.85 per cent in the December 2009 quarter.

On top and second-tier low-rate credit cards, the net impact of interest rate movements made by Westpac, ANZ and CBA was a cut of 0.5 per cent, a result of the three moving in lock-step with each other since June 2009.

By March 1 all three banks charged 12.49 per cent on these cards.

NAB’s customers experienced a cut of 0.1 per cent over two years, with the bank charging 12.24 per cent by March 1 after lifting the interest rate by 1.25 per cent during the December 2009 quarter.

Its three rivals raised interest rates on the low-rate cards by 0.75 per cent in the December quarter, matching the RBA’s three 0.25 per cent rate rises in October, November and December last year.

The RBA last week raised the official cash rate by another 0.25 per cent to 4.0 per cent.

Westpac said it would pass this on to credit card customers, while ANZ said its interest rates on credit cards remained under review.

CBA and NAB were silent on the matter.

AAP