Balance transfer fees may soon gain traction in the Australian market with new legislation affecting the allocation of credit card repayments. This will affect the profitability of balance transfer offers in Australia, thus pressuring the introduction of balance transfer fees.
However, a new RFi research report says in Australia, the majority of banks have developed bancassurance lines, with some banks building their own insurance arms such as CBA’s CommInsure. Bancassurance is no longer a side operation, but an integral part of the banking business in attracting customers and increasing revenue.
RFi research shows that, despite the wide reaching presence of the bancassurance model and the fact that most consumers would be comfortable buying insurance from a bank – consumers are largely unaware that their MFI (main financial institution/main bank) offers insurance. As a result, only a few banks are doing well at cross-selling insurance and are gaining market share, namely Suncorp Bank and Westpac.
It is predicted that the UK government reforms will reduce fees, repayments and overall debt for customers. Similar reforms have been drafted by the Australian Government with the reforms having the potential of changing the structure of credit card offerings Credit card issuers in Australia and the UK have different drivers of revenue, where it is common for Australian credit cards to have annual fees, unlike cards in the UK. UK credit card issuers earn revenues through other means, such as balance transfer fees of up to 3% for consumers who move their debt to new cards with a balance transfer offer.
However, balance transfer fee issue in Australia will affect the profitability of balance transfer offers in Australia, thus pressuring the introduction of balance transfer fees. Increased competition, more favourable credit card regulations, and credit card use displacing cash as preferred method for small payments, should drive recovery in the Australian and UK credit card markets.
For more data on Australian Credit Cards access CardData®. For information and commentary on Australian Credit Cards , visit the searchable CardFlash® Library of more than 58,000 articles published since 1995. RAM Research® forecasts on Australian Credit Cards are available exclusively through CardWeb.com.®