When the Reserve Bank of Australia (RBA) introduced the payment card surcharging framework in 2003, it opened the floodgates for businesses to charge customers an extra fee if they used a credit or debit card to pay for goods or services. Prior to 2003, the major card networks such as Visa and Mastercard prohibited this practice.

The move by the RBA was meant to encourage consumers to seek out and use the lowest cost payment method they could find. It was a measure aimed at counteracting the increasing costs to merchants being applied by the networks, which were then passed on to customers.  

But defining how much merchants were allowed to charge proved problematic. In 2016, the Australian Competition and Consumer Commission (ACCC) gained the power to enact a ban on excessive surcharging – defined as merchants charging customers more than it cost to accept the debit or credit card payment.

The allowed amounts charged to consumers ranged from 0.5% to 2% of the cost of the purchase for credit cards, and from 0.85% to 2% for debit cards, depending on the size of the business (smaller businesses charge higher surcharges since they pay more to use payment card networks).

It’s fair to say that these approximate caps have been routinely exceeded by businesses large and small in recent years. Airlines, in particular, have been notorious for their massive surcharges, though they often called them something else, such as a “handling fee”.

Aligning with consumer preferences

Now the RBA has come full circle and committed to banning surcharging altogether.

“The surcharging framework, introduced more than two decades ago, is no longer achieving its intended purpose of steering consumers towards making more efficient payment choices,” the RBA said in a statement.

“The increased prevalence of businesses surcharging all cards at the same rate, challenges with enforcing the current surcharging framework, and consumers using less cash have reduced the effectiveness of the surcharging regime.”

The RBA also noted that removing surcharges “aligns with the preference of most consumers for payment costs to be incorporated into advertised prices”.

Professor Angel Zhong of RMIT says the total surcharging ban, which is set to take place in October, “reflects the reality that, in a cash‑light economy, surcharging no longer works as an effective consumer choice mechanism”.

“For consumers, the key benefit is simplicity: the advertised price should increasingly be the final price, reducing confusion and frustration at checkout,” Zhong says.

But she cautions that it’s soon to celebrate the end of unfair card fees. “Payment costs do not disappear, and how much is absorbed by businesses versus passed on to consumers will depend on how the reforms are implemented in practice.”

The secret rise of debit card surcharges

In mid-March, the ACCC announced that it had launched an investigation after receiving tip-offs about high surcharges from customers of Hyatt Regency Sydney.

The regulator found that customers paying with a debit card attracted a surcharge above Hyatt’s costs of acceptance, unless the customer inserted the card into a payment terminal and selected “chq/sav”, something customers would have had no way of knowing.

It highlighted how tricky the surcharging space had become, and that surcharges were increasingly and stealthily being applied to debit card purchases.

“The ACCC expects all businesses to comply with the law and ensure their payment systems and staff are informed of different card types and apply the correct surcharge amounts for each, as it can vary between credit cards and debit cards,” ACCC deputy chair Mick Keogh said at the time.

Free and fair way to pay

When ����Vlog recently sent out a petition to ban debit card surcharges, more than 24,000 people signed.

����Vlog head of policy Morgan Campbell says card surcharges are a product of another time, and Australians will be glad to see the back of them.

“At a time when so many are doing it tough, the last thing consumers need is to be hit with a surprise surcharge at the checkout, particularly when many businesses no longer accept cash,” he says.

The forthcoming ban means card payments will be “simpler, more transparent, and most importantly, more affordable for consumers”, says Campbell.

“In a cost-of-living crisis, this fair, free way to pay is more important than ever.”

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Gift cards are tricky financial instruments that can come with unwelcome surprises, such as the business in question going bust or the card expiring before you can use it. They’re purchased with cash but generally can’t be exchanged for cash. It’s funny money with little of the flexibility of actual money. 

In the 2010s, ����Vlog put a lot of work into making gift cards fairer for consumers, resulting in some much-needed regulation.

Since November 2019, gift cards have had to remain valid for at least three years with the expiry data clearly shown, and any conditions or restrictions on the use of the gift card must be clearly communicated. (There are some exceptions to these rules when it comes to reloadable gift cards and one-off promotional vouchers.) 

Businesses are also not allowed to charge you unfair fees, such as activation, account keeping or inactivity fees. Having to make these rules illustrates the kind of tricks that gift card issuers had gotten up to.

Unexpected fees plus interest 

But while regulation has improved, grey areas remain, as ����Vlog member Helen recently found out. In August she purchased a $475 Woolworths e-Gift Card with her Commonwealth Bank credit card and was surprised when a cash advance fee of $14.25 was applied. Obtaining a cash advance via your credit card is never a good idea and is usually only done when others options have been exhausted. 

“I contacted CommBank and its response was that ‘a cash advance is when you use your credit card to access cash rather than goods and services’. Presumably CommBank interprets the purchase of a gift card as accessing cash and hence they can charge you in this fashion,” Helen says. 

The fee was bad, but the interest rate was worse, as is often the case with credit card cash advances. For Helen’s CommBank card, it was 21.99%, calculated daily and charged monthly, with no interest-free period. In other words, interest on what was now treated as a $475 loan began immediately. 

After a month, the interest and fees payable on that gift card purchase would have been about $23. After a year it would be about $95. Paying off the $475 debt, of course, would put a stop to the interest. 

What counts as a CommBank cash advance? 

CommBank says the following scenarios count as credit card cash advances: 

• Withdrawing money from an ATM with a credit card
• Transferring money from a credit card to another account
• Buying money transfers or traveller’s cheques with a credit card
• Using a credit card for gambling or other cash equivalent transactions (such as lottery tickets, money transfers or travellers cheques)

Using a credit card to buy a gift card is notably absent from the list, so we contacted CommBank in pursuit of an explanation. 

We got one, but it took us down into the weeds of what’s known as Merchant Category Codes. These are four-digit identifiers assigned to merchants by credit card schemes such as Mastercard and Visa which determine whether a transaction is considered a cash equivalent. 

The CommBank spokesperson tells us that purchasing a ‘stored value’ card (including gift cards) with a CommBank credit card is treated as a cash advance by the bank when it’s purchased through a third-party payment platform, due to the category code kicking in.

Notably, it wouldn’t be a cash advance if purchased directly from Woolworths, either online or in-store.  

“Cash or cash equivalent transactions can be considered a cash advance based on how the merchant categorises the transaction,” the spokesperson says. 

This ambiguous statement would have come as news to Helen.  

She acknowledges that she paid for the Woolworths gift card with her CommBank credit card through PayPal, but she had done so several times previously. 

“In January and July this year, I purchased Woolworths gift cards in exactly the same way and I was not charged a cash advance fee. I attempted to ascertain whether this was a new policy but I did not get a clear answer from Commbank,” Helen says. 

Cash advance policies of other banks

All the major banks include the same cash advance scenarios outlined by CommBank on their websites, but none – including CommBank – list the use of third-party payment platforms. Only one major bank, ANZ, says gift cards purchased with a credit card will be treated as a cash advance in addition to the other scenarios. 

ANZ Bank also says that paying a bill with your credit card in person at a bank or post office will be treated as a cash advance, which may come as a surprise to some customers.  

While this hiccup in Helen’s finances is not a life-changer, it means she’ll be changing the way she pays for gift cards. And she’s still not clear on why she accessed a cash advance without meaning to. 

“I would imagine that many seniors purchase Woolworths gift cards as they are able to access a 5% discount. If it’s treated as a cash advance, then the discount is nearly wiped out. Needless to say, I am not very happy with the situation and the response from Commbank has been unsatisfactory to date.” 

The post Using your credit card to buy gift cards? You might be paying more than you think appeared first on ����Vlog.

An offer of 60 months of interest-free credit can be especially compelling to people who don’t have the cash on hand to buy something they need. It has the whiff of free money. But in the case of the Latitude Finance and Harvey Norman partnership, important details were left out of the advertising campaign.

It turned out that the interest-free offer involved signing up for a Latitude credit card – one that came with an initial cost as well as ongoing monthly fees. The advertisements neglected to mention this. They also didn’t explain that a single late payment would result in the loan going from interest-free to some of the highest interest rates on the market.

Handing out credit cards at point of sale without robust responsible lending checks is a practice that earned the lender and retailer a 2020 ����Vlog Shonky. As part of that investigation, we profiled cases of Harvey Norman flogging Latitude credit cards at the checkout counter and encouraging customers to buy items on finance they didn’t need or ask for – we even found cases where salespeople suggested a $12,000 limit when the product being sold cost a fraction of that sum.

By way of example, we also pointed out that making only the minimum repayments on a $5000 Harvey Norman Latitude Mastercard Go at 22.74% would mean paying $17,909 over the 29 years and eight months it would take to pay off the loan ($12,909 in interest).

Grounds for appeal ‘barely arguable’

In 2022, the Australian Securities and Investments Commission (ASIC) launched a court case against Latitude Finance and Harvey Norman for “pursuing a national advertising campaign which failed to adequately disclose the true scope and cost of the promoted payment method”.

In October last year, the court ruled that the lender and retailer had broken the law, but Latitude Finance and Harvey Norman appealed the decision. In August this year the Full Federal Court knocked back the appeal and suggested it should have never been mounted.

The court ruled that the grounds of appeal “lack merit and are barely arguable” and that it was “regrettable that the final determination of remedies in this proceeding has been delayed by the unmeritorious applications for leave to appeal”.

The legal team for Latitude Finance and Harvey Norman tried to convince the court that people seeing the advertisements would know there must be a catch and therefore they weren’t misleading. This didn’t fly with the court.

“Ordinary and reasonable consumers would have assumed that the offer made in the advertisements was stated accurately, particularly in light of Australia’s strong consumer protection laws,” the court stated.

“This is an important win for consumers. ASIC took this case because we believed many consumers were unaware of the financial arrangements they were entering into, and they deserved to be fully informed,” says ASIC deputy chair Sarah Court, adding that the decision “reinforces the importance of truthful advertising”.

ASIC will be seeking court costs and financial penalties for Latitude Finance and Harvey Norman as well as an injunction against further misleading ads.

The post Harvey Norman and Latitude Finance’s appeal shut down in court appeared first on ����Vlog.

The fraudster moved fast. In a little over an hour, they accessed $2000 in cash from an ATM, paid for a meal at McDonalds at The Strand in Sydney, then went on a shopping spree at the nearby Apple and JB HiFi stores, charging a total of around $17,000 to the credit card account of Sydney pensioner Brian and his wife. 

Shortly after the electronics binge, National Australia Bank (NAB) caught on to the suspicious activity and blocked the card. The fraudster called the bank posing as the legitimate cardholder and tried to have the block removed, but the bank wasn’t buying it. 

Then, posing as an NAB employee, they called the cardholder, Brian, for the same purpose. This is when Brian first realised that his credit card account had been breached. The jig was up for the fraudster, but they had gotten away with plenty. 

Bank blames the victims

It’s an open and shut case as far as NAB is concerned – they have refused to reimburse the roughly $19,000 that was charged to Brian and his wife’s joint credit card account. But to Brian, the bank’s reasoning sinks to the level of absurdity. 

In correspondence with Brian, the bank claims that because the criminal had the PIN information, the ‘balance of probability’ indicates that the couple must have failed to protect it. NAB maintains it made no errors that contributed to the loss and couldn’t have acted to prevent it. Therefore the bank absolves itself entirely, despite the fact that banks have historically not been in a position to prevent untold numbers of banking scams.  

Brian and his wife are sure their credit cards were always in their possession, and neither had shared their PIN with anyone. 

As it stands, they’re faced with the galling prospect of paying off a steep credit card bill run up by a criminal. 

It may have been skimming

Brian theorises that his credit card may have been skimmed when he used it at an NAB ATM. With a physical skimming incident, devices are installed on ATMs or other point-of-sale terminals by criminals. The device captures the card number and other data as well as the PIN. The criminals then create fake credit cards and charge people’s accounts. 

But old-school physical skimming has evolved into digital skimming, where criminals infect websites and other platforms that accept credit card payments with malicious code that steals the details. The malware can go unnoticed for a long time. Whether it was a physical or digital skimming incident in Brian’s case, or a skimming incident at all, remains unknown. 

What Brian does know is that, in his view, his 55 years of loyalty to NAB has been rewarded with callous indifference. In a ‘goodwill gesture’, the bank offered the couple $1000 to make the matter go away, a move Brian describes as “pathetic”. 

“They’ve implied that because we’re old or something, we may have somehow attached our PIN numbers to our credit cards. It’s as if they’ve never heard of skimming,” Brian says. 

Brian is also sure of another detail: neither his or wife’s credit card had ever gone missing.

NAB says protect your PIN

Brian believes he has presented a case to NAB that proves that he and his wife did not violate the bank’s requirement that cardholders not reveal their PIN to anyone. 

NAB retail executive Tony Story tells ����Vlog the bank “is committed to protecting our customers from fraud” but suggests a PIN must have been disclosed to a fraudster in this case. 

“While we cannot comment on individual cases for privacy reasons, we remind all customers of the importance of keeping their PINs secure. Sharing or inadvertently disclosing your PIN – including through phishing scams – can compromise your account and may breach the card protection terms and conditions.”

Story says customers who are aware that they’ve revealed their PIN should contact the bank.

“If you believe you’ve been scammed or your PIN has been exposed, please contact NAB immediately. We will investigate and support you through the process.”

In the first four months of 2025, Australians reported around $119 million in losses to the ACCC’s Scamwatch service. Most of the money was stolen through phishing scams, where scammers impersonate government agencies, financial institutions and other businesses. Total scam losses in 2024 reported to the ACCC and other agencies was around $2 billion. 

Pinning their hopes on AFCA

Brian and his wife have escalated the case to the Australian Financial Complaints Authority (AFCA), but Brian is worried that he’s just one of hundreds of thousands looking for a fair outcome. (AFCA received 100,745 complaints in 2024–25.) 

“It seems like everyone’s overwhelmed, including the banks. And they just seem to fob people off to AFCA.” 

Brian acknowledges that NAB has been generally reasonable to deal with throughout the complaint process, though one representative did imply that because the couple was of a certain generation, they were less likely to keep their credit card details safe. Brian and his wife bristled at the suggestion.  

The ongoing point of contention is that the bank refuses to reimburse their stolen funds, which is a significant financial blow for the couple. Then there’s the problem of not being believed when insisting that they know how to keep their credit card details secure.

In Brian’s view, he and his wife have been summarily dismissed. “The whole process has been stressful because they’re basically saying I’m a liar and a fraudster and I’m not.” 

In a letter outlining the case for the local police department, Brian and his wife got right to the point, saying NAB’s “failure to take responsibility for their grossly inadequate systems and provide answers to our legitimate questions is tantamount to supporting the criminal perpetrators”.  

The post NAB blames victims for unauthorised credit card charges appeared first on ����Vlog.

Having a business repeatedly charge your credit card without your consent can feel personal. It gets worse when the credit card issuer apparently can’t do anything about it. 

In these cases, banks often say you need to contact the merchant yourself to stop the charges, but what happens when that doesn’t work? 

Under Australia’s Banking Code of Practice, banks are required to cancel ongoing direct debits at the customer’s request. But recurring charges to credit cards are another matter. 

The battle to regain control of your credit card may involve dealing with upbeat but unhelpful bots on your bank’s website, having to explain the situation repeatedly to both bots and humans, and being subjected to an exhausting run-around by the business in question. 

Longtime ����Vlog member Andrea Osborne recently underwent all of the above. Along the way she became over-acquainted with an ANZ Bank virtual assistant named Lottie as she tried to prevent the UK-based antivirus software company TotalAV from continuing to charge her credit card. 

It started with a modest $20, which Andrea had authorised, but two months later another $40 transaction came out of the blue.  

“I phoned the company and I was told that my subscription had been an introductory offer, which only lasted for 60 days, and that the funds deducted were to take it up to a full year’s subscription,” Andrea says. 

It was the first she’d heard of any introductory offer. 

Then, 12 months after she first signed up, there was another $102 TotalAV charge that Andrea had not expected. To her knowledge, she had never given the company permission to take money out of her account without asking. The business then processed two more $102 charges over the next 12 months. 

“I complained to Total AV and was told that they had not only renewed my subscription but also upgraded my security – once again, without my knowledge or consent. I contacted ANZ and tried to get them to reverse this charge but I was told that unless I could prove that I had cancelled my subscription, there was nothing they could do.”

Twelve months later, TotalAV helped itself to another $184. The threefold increase over three years was extreme, but this time the business was ready to wheel and deal. They dropped the offer down to $29 and Andrea accepted. 

Subscription trap springs shut 

Then the problems started with her laptop. 

“My computer technician found that Total AV’s internet security was using so much memory that it prevented the normal functionality of my computer. He had to uninstall it to fix the problem.”

It was time to pull the plug. 

But the company seemed desperate not to let Andrea go. TotalAV customer service threw obstacles in her way, such as making her go through a verification process to make sure it was really Andrea before they could start the cancellation process. It seems TotalAV had concerns about what must be a rare type of fraud – people maliciously cancelling other people’s antivirus accounts without their permission. 

A customer service representative who may or may not have been a bot seemed particularly distraught, telling Andrea: “I’m really surprised to hear you are looking to cancel your service with us … I would love to be able to get a resolution together for you.”

For Andrea, the resolution was to get TotalAV to stop charging her credit card. 

“I tried to cancel my subscription. This proved virtually impossible. The help and support option only allowed me to try to cancel. But then when I tried to proceed, they just kept offering more and more discounts.”

Card cancellation not enough 

ANZ told Andrea that the only way the bank could prevent further withdrawals was to cancel her credit card and issue a new one. She was also told the bank couldn’t execute a chargeback since she had actually received the unwanted TotalAV subscription. 

A new credit card was issued in March 2025, but in April TotalAV charged her new card twice, totalling around $63. 

ANZ explained that Visa had apparently automatically updated TotalAV with her new credit card details, a standard procedure by the credit card giant for participating businesses. The bank suggested she cancel her credit card again. But Andrea had had enough. 

“I decided to divorce ANZ from my life by closing my account, but I am so disgusted that when my money is under their supervision, they decide who to give it to without my consent,” says Andrea. “Whatever happened to my money being under my control? And how has my decision about who it goes to been obliterated?”

We contacted TotalAV for comment on the channels we could find but there was no response.

ANZ says ‘contact the merchant’

An ANZ spokesperson tells ����Vlog that the first step for customers is to contact the merchant to stop recurring charges, something that Andrea had done several times.  

“If they are unsuccessful in resolving the issue, customers can contact our disputes team to assess their eligibility for a chargeback and ensure all available avenues for resolution are considered.” 

ANZ also suggested that customers could opt out of the Visa Account Updater (VAU) service, which automatically shares updated card details. The opt-out prevents merchants from receiving new card information after a card is replaced. Andrea knew nothing about this. 

CBA keeps processing charges 

In another case, frustrated Commonwealth Bank customers Ross Pollock and his wife Peggy recently contacted ����Vlog to share their own ordeal trying to stop recurring credit card payments.

Peggy needed to close her 91-year-old father’s credit card account. Her power of attorney was on record with the bank, but there was a wrinkle. Microsoft and Avast charges were still being processed every year, though Peggy had tried to stop both of them. 

“She was told that unless she could shut those two debits down at her end, Commonwealth Bank will continue to pay them,” Ross says. 

The couple finally managed to get Microsoft to discontinue the charges but were still dealing with Avast at the time of publication. 

A Commonwealth Bank spokesperson directed us to guidance on the bank’s website on how to stop recurring payments on credit cards. The page instructs customers to contact the merchant and warns that “any contractual arrangement between you and the merchant may remain in place”. 

The bank also instructs customers to contact them to request a stop on a recurring charge. 

The Pollocks took both of these steps to no avail. For Ross, a bank’s refusal to stop credit card charges at the customer’s request is a matter of misplaced loyalty. In his view, principles of contract law come into play. 

“The bank has entered into a contract with the account holder and not any third-party supplier such as Microsoft or Avast. The account holder is the one who has a contract with the supplier. It shouldn’t be up to the bank to continue to honour a payment to the supplier after the account holder has requested that it be stopped.” 

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When we handed the retailer Harvey Norman a ����Vlog Shonky Award in 2020, it was because the company had entered into what we considered an unholy alliance with the firm Latitude Financial.

At the time, Latitude had four credit card products that were on our list of the 10 highest interest rate cards in Australia. In fact, the Latitude cards were in the top five, with interest rates ranging from 21.99% to 24.99%.

Harvey Norman was signing up customers to Latitude cards at point of sale, meaning customers in the store were given the ability on the spot to buy something without a proper check by the card issuer on whether the purchase was appropriate to their financial situation. 

Many people who are extended credit under such circumstances go on to pay only the minimum amount due each month, since they really didn’t have the money to buy the item in question and can’t pay off the balance.

Making only the minimum repayments on a $5000 Harvey Norman Latitude Mastercard Go at 22.74% would mean paying $17,909 over the 29 years and eight months it would take to pay off the loan ($12,909 in interest).

We documented cases of Harvey Norman pushing Latitude credit cards with $12,000 limits at point of sale and encouraging customers to buy items on finance they didn’t need or ask for. These were often marketed as ‘interest-free’ offers, but the catch was that you had to pay off the total debt before the interest-free term expired or the interest rate would jump sky high.

Consumers misled by ad campaign

The Australian Securities and Investments Commission (ASIC) took an interest in the Harvey Norman/Latitude Finance partnership around the same time we handed them a Shonky Award.

ASIC’s recent win in the Federal Court against both companies shows just how dubious their interest-free offers can be.

The issue for the regulator was that advertisements for the Harvey Norman/Latitude Finance 60-month interest-free offer neglected to make clear that you needed to sign up to a credit card to access it.

It’s an issue we highlighted in a related story about Latitude’s partnership with Apple stores, where our case study only found out at the store that Apple’s interest-free deal was actually a credit card offer.

Regarding the recent ASIC win, deputy chair Sarah Court says the regulator “took this case because we believed many consumers may have been unaware of the financial arrangements they were entering into when they bought everyday products at Harvey Norman stores. In some cases, this may have meant they paid considerably more for purchases than they expected”.

The financial obligations on customers with a credit card “are different to what was advertised by Harvey Norman. A continuing credit contract can involve multiple advances of credit together with monthly account service fees and high interest rates, all of which add up for consumers”, Court says.

The essence of ASIC’s case was straightforward: consumers need to know what such interest-free promotional offers really entail “so that they can consider their current financial position and decide if a credit card is the appropriate product for them”, Court says. 

ASIC is seeking financial penalties against both companies. In a statement issued to the ASX, Latitude said it was reviewing and considering whether to appeal the court decision. 

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When it comes to sneaky surcharges tacked on to debit or credit card purchases, one thing is overwhelmingly clear – Australians really don’t like them.

In a recent survey of over 10,000 ����Vlog supporters, more than 95% say they’d been hit by a surcharge in the past year. 

Many point out that the continuing disappearance of cash in the economy means they have no choice but to pay digitally, and to wear the extra charges that come with it.

“It’s theft by stealth,” one respondent writes. “I find out at the end of the month that all these secretive underhanded surcharge fees cost me an additional $10 to $15 dollars that I was not made aware of at the point of sale. It is daylight robbery.”

“It’s never clear how much you’re going to be charged,” says another.

The way surcharging works is deeply complex, and small businesses generally pay significantly more to process card payments than larger businesses, who enjoy cheaper rates from the credit card companies. Local shops say they need to pass some of the costs along to customers to stay in business.

At the same time, though, businesses of all sizes can use their need to surcharge as an excuse to over-surcharge.

Excessive surcharging banned in 2017

All of this was supposed to come to a stop a long time ago. Excessive surcharges on card transactions were banned in 2017, and since then businesses have been required to limit any surcharges to the costs they incur when processing the transaction. 

If the cost to the business when a customer pays with a Visa card is 1% of the transaction amount, for example, that’s how much the business is allowed to surcharge the customer. Anecdotal evidence suggests this rule is routinely flouted.

The Australian Competition and Consumer Commission (ACCC) is responsible for enforcing the ban, and in 2017 it warned businesses that a single violation could result in a $1,358,910 penalty if the case went to court. Infringement notices issued by the ACCC outside of court could mean $12,600 fines for private businesses and $126,000 for businesses listed on the share markets. 

In the years leading up to the ban, ����Vlog campaigned against the surcharging excesses of a wide range of businesses, many of which had made up their own rules on how much extra they could charge. The surcharging situation had gotten out of hand. 

But it can be very hard for a customer then and now to know whether they’ve been excessively surcharged, or to hold the business to account in cases where it seems they have.

Ban on debit card surcharges in the works

The Reserve Bank of Australia, which regulates the card payment system, is currently investigating the issue, and this week the federal government announced its willingness to impose a total ban on debit card surcharges starting in 2026, depending on the outcome of a consultation process.

In the meantime, the government is providing $2.1 million in new funding to help the ACCC clamp down on excessive surcharging.

“Consumers shouldn’t be punished for using cards or digital payments, and at the same time, small businesses shouldn’t have to pay hefty fees just to get paid themselves,” Treasurer Jim Chalmers said when the funding was announced, adding that the government “is prepared to ban debit card surcharges, subject to further work by the Reserve Bank and safeguards to ensure small businesses and consumers can both benefit from lower costs”.

Assistant Treasurer Stephen Jones said surcharges “pile up and punch a big hole in the wallets of customers and the takings of small businesses owners”.

����Vlog welcomes proposed ban

It’s a complicated issue, and small businesses may feel they have no choice but to pass on reasonable card transaction costs, but surcharging has clearly gone off the rails again.

 “Current card surcharge practices and fees vary wildly, making it harder to know what price people can expect to pay,” says ����Vlog head of policy Tom Abourizk. “People should be able to expect that the advertised price is the amount that gets taken out of their bank account. There should be a fair and free way to pay with your own money.” 

Abourizk points out that Australia has EFTPOS, a low-cost debit transaction alternative to multinational card companies like Mastercard and Visa, which offers one way to avoid being chiseled.

And while surcharges can be annoying, under the current system, they’re often necessary from the point of view of small business owners.  

Along with putting the kibosh on sneaky extra charges on customer purchases, any reforms of the card payment system “must ensure small businesses can get a fairer deal on the costs of processing both debit and credit cards”, Abourizk says.     

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When a 24-year-old university student we’ll call Belinda visited an Apple store in Newcastle last year, she was in a tight spot.

Her old MacBook Air had stopped working, and she needed to get a new one fast to meet her assignment deadlines. 

Belinda’s dilemma was a familiar one for people short on disposable income – she didn’t have the $1700 it would take to get a new computer. 

She’d seen an ad on the Apple website offering interest-free payment plans, but when she arrived at the store the offer seemed to have changed. 

An Apple employee said she could set her up for interest-free payments, but first she had to fill out an application. 

“And I was like, what’s this? I didn’t really understand what she meant. And it was a Latitude credit card,” Belinda tells ����Vlog.

“I was under the impression that the ad clearly stated that it was going to be like a payment plan. It was nothing like what I had expected. I don’t have a credit card for a very good reason.”

(The current Latitude ad on the Apple website does say it’s a credit card.)

Confused and distressed, Belinda called her mum. 

“She couldn’t understand why she was getting a credit card when all she wanted was to replace her laptop urgently so that she could finish her assignments,” Belinda’s mum Amy tells ����Vlog, adding that she herself had had a similar experience with an interest-free offer at Harvey Norman. 

“Many young people are in the same situation as my daughter,” Amy says. “Apple is taking advantage of students who have little financial experience, particularly with credit products. 

“I wonder how many have missed an interest-free payment and are unaware of the consequences.”  

(Amy ended up providing Belinda an unconditional interest-free loan of the parental kind.)

When the interest-free period ends

For some, the current long-term interest-free Latitude offer at Apple (called the Latitude Creditline card) is a potential debt trap waiting to spring shut – especially for someone in Belinda’s shoes, working multiple jobs while studying and struggling to make ends meet. 

Paying the minimum monthly payment only on the Creditline card, for instance, would not pay off the debt before the end of the interest-free period, at which point the interest rate would jump to 25.90%. 

And Latitude would continue charging a $4.95 monthly card fee as long as the account was open. 

And there are other temptations lurking: the card can also be used for cash advances and Eftpos purchases, also at 25.90% interest. 

Latitude Finance says it’ll take you 10 minutes to apply online for the Creditline card (while in the store or elsewhere) and that you’ll find out whether you’ve been approved “in under 60 seconds”.

If approved, you can start shopping using your credit card account number immediately, without having the actual physical credit card in hand. 

But you’d end up paying a lot more than the original $1700 if you only made the minimum monthly repayment. We calculated that it would take six years and 10 months to pay off the debt, and you’d incur about $1000 in fees and interest along the way.

If your monthly payments are not enough and there’s a balance on the card after the interest-free period is over, you’ll be charged 25.90% interest. 

Latitude refutes claims 

“It is extremely concerning that businesses may be using deceptive tactics to sign-up unsuspecting people to high-rate credit cards,” says ����Vlog head of policy Patrick Veyret. “We’ve heard from financial counsellors who say that credit cards sold in stores regularly lead people into a debt spiral.”

But the company denies its products have this effect. 

“Latitude does not lend credit unless a customer can demonstrate, via a full serviceability assessment, that they can afford to repay their credit balance in full,” a spokesperson tells ����Vlog. 

They also say that Latitude’s “high lending standards mean that we reject many more applications for credit than we approve”. 

Referring to the Apple Creditline offer, the spokesperson says, “No interest is charged for the duration of the interest-free plan and the vast majority of customers pay off their full balance by the end of the interest-free plan.”

Over 5000 Latitude complaints and counting 

In 2020, ����Vlog gave Harvey Norman a Shonky award for flogging Latitude credit cards at point of sale. And we’re hardly the only critics of the card issuer. 

Latitude Finance Australia has received more complaints to the Australian Financial Complaints Authority than any other medium-sized financial services business over the last four financial years by a wide margin, a total of 5307.

(While Latitude also offers personal loans, it received approximately seven times more complaints for its credit cards.)

ASIC takes Latitude to court 

In October 2022, ASIC started legal proceedings against Latitude and Harvey Norman for its advertising of interest-free payments between January 2020 and August 2021. 

The ads neglected to mention that you had to apply for and receive a Latitude Go Mastercard first, and they also misrepresented how much you’d end up paying. Belinda didn’t recall seeing a credit card mentioned in the ads she saw either.

The Latitude cards on offer at Harvey Norman “attracted substantial fees over the course of the 60-month payment term, and exposed consumers to the risks of incurring further debts and charges, as well as potentially affecting their credit rating,” ASIC deputy chair Sarah Court said in October.   

Latitude says it disputes ASIC’s allegations and will be defending the matter in court.

Meanwhile, the company’s business model seems to be working. Latitude became an ASX-listed company in financial year 2021 and made a net profit of $232 million. It also acquired the personal loan platform Symple and launched a new version of its buy now, pay later platform, LatitudePay, that allows purchases up to $10,000. 

In addition to Apple, you can apply for a Latitude credit card at retailers including JB Hi-Fi and The Good Guys.

Design and distributions obligations 

It turns out there are rules around who you can target with credit card offers. 

In December last year ASIC took legal action against American Express Australia (Amex) for its handling of two credit cards co-branded with the retailer David Jones. 

It was a significant move – the regulator’s first court case for alleged breaches of the ‘design and distribution obligations’ (DDO) that came into effect in October 2021. 

The DDO regime requires that issuers and distributors of financial products “ensure that consumers obtain products that are likely to be consistent with consumers’ objectives, financial situation and needs”.

According to ASIC’s Sarah Court, the DDO regime “turned a new page in the regulation of financial products in Australia and is intended to deliver better outcomes for consumers”.

In the Amex case, ASIC contends that the card issuer knew that the David Jones Amex Card and David Jones Amex Platinum Card, which could be applied for instore, were not always suited to their users’ financial situations. There were high cancellation rates, for one thing, and some customers weren’t sure if they’d applied for a credit card or a loyalty card. 

That meant that Amex’s ‘target market determination’ – an aspect of the DDO regime that requires issuers of credit to describe who their products would be appropriate for – was likely off the mark. In such a case, Amex should have stopped issuing the cards and reviewed its TMDs. But it failed to do that for at least six months, according to ASIC. 

The Latitude Creditline target market determination is dated 9 December 2022 and says it’s not meant for people who use credit cards to “finance substantial interest-bearing balances for prolonged periods” or “require frequent access to cash advances”. 

Latitude says it will check in December 2023 whether too many people are paying long-term interest or getting cash advances, but by then it will be too late for those who are. 

(Note: Names of sources were changed to protect their privacy.)

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On this page:

• Why is 0% interest on offer? 
• Finance for consumer goods and cars 
• Tips when considering 0% finance
• Credit card balance transfers 
• Tips to make 0% credit card transfers work 

Whether it’s credit card switches, car loans or consumer goods like appliances bought on interest-free plans, we can’t seem to stop borrowing. But before you toast your latest purchase with a round of drinks charged to your no-interest credit card, take a leaf from your grandparents’ book.

Why is 0% interest on offer? 

All financial loans are carefully crafted with the goal of reaping profit from you, not helping you get ahead in the world. So how do lenders pursue that overriding agenda using a 0% interest strategy?

Money comparison website Mozo currently features almost 100 0% credit card balance transfer deals. Some of them may even be a smart move if you proceed with caution.

A better profit margin is usually a seller’s main motivation for offering low or no interest deals. With zero interest deals, the sticker price may be higher to begin with. 

Businesses generally aren’t in the habit of providing something for nothing – so do your research and stay smart.

Finance for consumer goods and cars 

Conditional loans

Conditional loans can lock you into buying at a higher price. For example, a car dealer may only offer you a 0% loan if you agree to paying full price for the vehicle. But you might find you get a better deal, and pay less overall, with a loan that comes with interest, and retaining negotiating power on the overall purchase price.

Real cost of a loan

Because of clever marketing and spin, the real cost of a loan may not always be obvious at first glance. Don’t forget you may be up for additional costs such as an application fee, administration fees, account fees and charges for missed repayments.

Revert rate

In the excitement of the moment it’s easy to forget that life doesn’t always go to plan, particularly when it comes to money. That’s important because economic ups and downs can affect your ability to repay the loan in the agreed time. If you’re unable to do so, the punishing revert rate will kick in after the introductory period – far more than 0%. Interest-free periods are always limited, so that may be just what the seller is hoping for. 

Tips when considering 0% finance

• Shop around before locking in a 0% finance deal. Ask yourself what price those goods would be for cash, how negotiable would that be, how badly do you need those items – and will they be obsolete before you’ve even paid them off?
• Ask yourself if it might be cheaper to make the purchase using an alternative strategy such as cash, a low-interest loan or refinancing.
• Read the fine print and always do the math before entering any formal agreement.
• Use loan calculators (the government’s has some good ones) to compare products. 
• Remember, sometimes low interest loans can work out cheaper than 0% deals.

Credit card balance transfers 

Australia’s credit and charge card debt stands at around $16.8 billion in September 2022. Clearly, credit cards play a significant part in the debt profile of the average Australian consumer.

The 0% credit card debt transfer deals currently on the Mozo website range from a balance transfer period of 6 months to 36 months. 

What to watch out for 

• Interest rates: One key trap with credit card debt is the purchase interest rate on the card. These can vary greatly so do your research before you sign up.
• Essentially, the 0% deal will only apply to the debt you transfer. If you use the new card for other purchases or cash advances, you’ll be charged interest at whatever that card’s standard interest rate is. That can be up to 25%.
• Revert rate for balance transfers: Be aware that once the balance transfer offer period has expired, any remaining debt will accrue interest at the card’s revert rate, which currently ranges from 8.99% to 25.99% – often as bad as the card you transferred from.
• Hidden fees: Check hidden charges like the transfer fee, which can be as high as 3% of the amount you’re transferring (if you’re transferring a few thousand dollars, that can deliver a nasty sting). Also, check the card’s annual fee, any admin fees and late payment fees.

Tips to make 0% credit card transfers work 

If you have a credit card debt of $10,000 with a current interest rate of 16%, you could save about $880 in interest over the next 12 months (taking the reduction of the loan amount over time into account) by transferring the debt to a card with a 0% transfer rate for 12 months and no fee.

Make sure you change to a card where the interest rate on new purchases and the revert interest rate after the initial 0% period are both lower than the interest rate you were previously paying.

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Australian retirees continue to face hurdles getting access to credit cards, and say banks don’t understand their circumstances or are preferring to lend to more profitable customers.

����Vlog has heard from several retirees and semi-retirees who have been denied credit, despite having income and assets they deem high enough to cover repayments. They believe age discrimination could be at play.

But the complaints sit against a background of increasing regulation that’s forced financial institutions to be more careful about who they give credit cards to, and to do away with unsolicited credit-limit increases designed to encourage people to spend more.

Blocked from credit cards, despite assets and income

Chris, a 71-year-old semi-retiree, says he “couldn’t believe it” when the Commonwealth Bank of Australia (CBA) told him he didn’t qualify for a credit card he’d applied for online.

The Sydney resident says he has “substantial” assets and income, including multiple properties. He says the mortgage on one of them is his only source of debt, which he says he has “ample income to cover”.

Self-employed on a part-time basis, Chris was applying for either a Business Awards or Business Platinum Awards card with the bank, to keep business expenses related to his work in the legal sector separate from an existing personal card, also with CBA.

Despite being marketed as ‘business cards’, the liability on these products is personal and Chris says he had to provide information on his own income, assets and liabilities when applying.

Deemed ‘unsafe’

When his online application was denied, Chris contacted CBA directly. The bank told him it would be “unsafe” for him to have more credit. 

Chris suggested the bank could reduce the $54,000 limit on his existing CBA card by a certain amount and allocate the same amount to the new business card. The bank didn’t take up the suggestion.

Chris says it was the first time in his “entire life” that he had been denied credit, and that he would have been happy with even the $500 minimum promised by one of the business cards.

“[But the bank] had formed the view that I had too much debt … and I should reduce [it],” Chris says. “Now, if one wants to be serious about that, what they would do is say: ‘What we’re going to have to do is actually reduce the level of debt on your existing card.’ But they didn’t say anything about that at all.”

Secondary cardholders struggle to build credit history

The credit landscape has changed in recent years with the growth of buy now, pay later platforms and debit cards that can be used on the Mastercard and Visa networks. 

But Swinburne University professor Steve Worthington, who studies payments systems, says although use of credit cards may be declining, they’re still proving popular. 

One reason why someone may want a credit card over other forms of payment, he says, is because it can make it easier to get access to other credit products.

“It is a way of building a credit history for yourself … if you want to have future loans or, for example, a mortgage,” he says. “So it helps to build your credit position, the fact you’ve had a credit card [and] held it for a while.”

That’s what Queensland self-funded retiree Marilyn was trying to do when she applied for a credit card from ANZ.

The 72-year-old is looking to build up her own credit history after being the secondary cardholder on her husband’s card for several years. She says she wants to avoid being left without credit if he dies before she does.

“I’ve seen a number of friends [in] my cohort of retirees who have been widowed,” Marilyn explains. “Or, if their partner’s health deteriorates, suddenly they don’t have access to a credit card if they’re the secondary cardholder.”

‘Ludicrous’ decision

Marilyn says she’d had no trouble when she’d previously had a credit card of her own. Yet ANZ denied her application for a new card with a $6000 facility, claiming she didn’t meet its lending criteria.

Like Chris, Marilyn believes she could have easily taken on the cost of having the card, and found the bank’s decision similarly hard to understand.

“They weren’t satisfied that I could meet the repayments on a credit card,” she says. “If you’ve got substantial assets and you’re applying for $6000, that’s just ludicrous.”

Lots of other retirees have shared similar experiences and sentiments in the , saying they’ve been denied credit products they can afford.

Many have also spoken out about the lasting importance of having a credit card as a backup, especially when travelling overseas. For instance, some say their debit cards weren’t accepted when they were trying to pay deposits on hire cars and hotel rooms.

Are banks just chasing profit?

So why are so many older Australians apparently getting cut off from credit? Worthington says it’s possible that card providers are bypassing retirees in favour of giving credit to less scrupulous spenders.

He says there are two types of credit card customer – and one is more lucrative to card providers than the other. 

The first type are ‘revolvers’, who repay only the minimum amount required on their balance each month. The second type are ‘transactors’, who pay off in full what they’ve spent within an interest-free period.

According to Worthington, card providers make most of their profit from the accrued interest that customers pay, meaning “the real money to be made is from the revolvers”.

It’s a theory that rings true for Chris, who says he pays off the balance owing on his existing credit card every month and rarely pays interest. He believes this pattern may have played a role in the bank denying him another card.

“[The bank’s] own facts and figures tell them that I quite easily pay off a credit card with them,” he says, “So the only thing I can think of, apart from age, is the fact that they’re not making a dollar out of it, or enough dollars out of it.”

Marilyn tells a similar story, saying she pays off in full the card on which she’s a secondary holder almost every month, and rarely racks up interest.

Royal commission findings support this theory

In 2018, ����Vlog reported on revelations from the banking royal commission that banks had, unprompted, stepped in to increase the credit card limits of customers who had lost control of their spending – a practice now outlawed.

Our other investigations have also uncovered the significant harm caused by long-term credit card debt and how those who accrue it end up paying the bank back much more than they’d originally spent.

All this evidence points to credit card providers’ long-running trend of giving preference to more lucrative, interest-paying spenders as customers.

The banks respond

To follow up on the experiences of Chris and Marilyn, we contacted the relevant banks to ask them how they appraise credit card applications.

Commonwealth Bank of Australia (CBA)

In a statement, the CBA says it considers a number of factors when assessing credit card applications, including the applicant’s ability to make repayments, their existing liabilities and repayment history. It didn’t respond to a question about whether an applicant’s age is a factor.

The bank also explains that although credit card customers may be allowed to continue to use their cards, changes to their circumstances such as employment and income can affect future card applications.

ANZ

Similarly, ANZ says it considers “the suitability of the product for the applicant, income, expenses and the ability to repay,” and states that it follows regulations to look at the capacity of a credit-card applicant to make repayments – and not at their age.

Neither bank commented on whether an applicant paying off previous credit cards quickly or slowly affects their decision to grant them a card.

Banking association points to National Credit Act

The Australian Banking Association (ABA) represents many of the country’s other big lenders. It says banks do take stock of an applicant’s assets, and will lend to applicants of all ages.

A spokesperson tells ����Vlog that banks are beholden in their lending to the National Credit Act, which essentially prevents lenders from giving consumers credit they cannot pay back. 

The law, which was tightened in 2019, also requires lenders giving out credit cards to assess an applicant’s request based on their ability to repay the limit on the card within three years.

The ABA advises credit card applicants who find their requests for a card denied to follow up with the institution to provide further proof of their financial status, or even go to a competing lender.

Advocates call for greater flexibility for retirees

Ian Yates, chief executive of COTA (formerly Council on the Ageing), an advocacy group for seniors, says the denial of credit products to retirees who can afford them is a continuing issue.

He believes banks are turning away retirees because they’re not enough of a “primary market”, and are using responsible lending regulations as an excuse.

Yates argues banks and regulators should be more “flexible” and take better stock of the financial situation of older Australians before refusing to grant them credit due to irregular incomes, such as dividends or occasional wages.

“People in retirement usually have significant assets,” he says. “It’s not that they’re at risk of going financially belly up. It’s just that they don’t fit the income pattern of someone who’s going to work and getting fortnightly pay.”

Yates says COTA has previously worked with the ABA and formed a working group to discuss credit denial to seniors. This work was disrupted by the COVID-19 pandemic, but Yates says he’d like to see the forum reconvene and, if needed, involve the financial regulators to find ways to deliver this flexibility.

Retirees advised to plan ahead

National Seniors Australia is another advocacy group that often hears from senior members who’ve found themselves cut off from credit, though general manager Chris Grice says it’s becoming less of an issue.

He puts this down to the work his organisation has done in educating members on the wider variety of payment options now being offered by financial institutions, such as debit payments on the Visa and Mastercard networks.

Grice also believes that banks sometimes get disproportionate blame for not giving retirees enough credit leeway, when they’re operating under increased pressure from regulators.

“There’s still the inflexibility, or what can be seen as inflexibility, as far as the consumer is concerned, but [what] to others could be seen as responsible lending,” he says.

This is why it’s been important, he adds, for his organisation to motivate seniors who want to get a credit card to do so before the ‘crunch’ that can come with looking for credit in retirement.

“It’s like: ‘Ah geez, I wish I had known,'” says Grice of the retirees who find themselves knocked back for credit. 

“[We’re not] advocating for people to get credit and live outside their means, but it’s certainly helpful if they had done a little bit of planning or they’d known in advance of reaching that cut-off point.”

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