All credit products should be capped at 48% interest.
Payday lenders enjoy an exclusion from the cap on interest and fees in the National Credit Act that is applied to finance greater than $5,000. While payday loans are regulated in terms of the interest and fees charged, these loans can attract comparison interest rates between 112% and 407%. These high costs trap Australians into an ongoing debt cycle, perpetuating hardship.
The cost difference is significant. Typically, for every $100 borrowed for 30 days, $124 needs to be repaid. Compare this to a $100 cash advance on an 18% per annum credit card, where around $101.50 will be due after 30 days. All credit should be treated the same, and capped at no more than 48% per annum.
Policy contact: Zac Gillam: 03 8554 5088 – email@example.com
Media contact: Jonathan Brown: 0413 299 567 – firstname.lastname@example.org