RBA Cracks Down on Credit Card Surcharges

A $66 credit card surcharge on international flights has highlighted the hidden costs of reward credit cards in Australia.

The practice, where businesses charge a percentage-based fee on top of the purchase price, has been allowed to offset payment processing fees charged by network providers. However, it has come under scrutiny as Australians increasingly rely on debit and credit cards for transactions.

According to the Reserve Bank of Australia (RBA), the cost of using credit cards is estimated at $1.6 billion per year in surcharge fees. The RBA plans to ban surcharges on credit cards and debit cards from October 1, citing complexity and lack of transparency in the current system.

While some people use reward credit cards responsibly, others may struggle with high-interest rates and debt. The RBA estimates that there are over 10 million active credit card accounts in Australia, with about $19.4 billion in total debt accruing interest on personal credit cards.