Credit card penalties to be investigated

The Commerce Commission has announced its intention to investigate credit card penalty fees to ensure they are reasonable.

New Zealand banks charge a late-payment fee of between $20 and $25 per month and up to $25 for exceeding a credit limit.

The Credit Contracts and Consumer Finance Act 2003 requires fees to be “reasonable”.  The Commerce Commission’s director of fair trading has said that “the general principle is that credit and default fees must not be unreasonable and must have reference to the creditor’s costs or losses”.

A similar investigation by a British counterpart found that penalty charges on credit cards were illegal and many customers received compensation as a result.

 

Enquiries and information

For more information on any of the cases, articles and features in Financial Services Quarterly, please email Rachel Gowing or call on 64 9 916 8825.