Credit card providers receive $2.3 billion in credit card interest.

CREDIT-card applicants who have a good history of clearing debts will soon be able to get a lower interest rate.

G&C Mutual Bank last month began offering personal loans at as little as 5.99 per cent to those who have excellent repayment records, compared to 15.99 per cent for those who do not.

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Then last week it started waiving credit card annual fees for better borrowers. Rewarding them with better rates was the “next step”, CEO Dave Taylor said.

While “risk-rated” lending is common overseas, it does not yet exist in the Australian marketplace, which is dominated by the four major banks.

“The bigger end of town has been quite lazy in not giving any benefit they don’t have to give,” Mr Taylor said.

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The annual fee waiver on G&C’s 9.99 per cent credit card is part of a deal with peer-to-peer (P2P) lender SocietyOne. It is available to applicants who come via the website GetCreditScore, which is part-owned by SocietyOne, and achieve than 650 out of 1200. About 70 per cent of the first 350 applicants made the grade, Mr Taylor said.

SocietyOne CEO Matt Symons will today tell a Senate committee investigating credit card interest rates that more needs to be done to bring alternative borrowing options such as P2P into the “mainstream”.

Mr Symons on Monday said that in the UK, the government had provided £30 million ($43 million) to be lent through P2P, plus tax incentives for individuals who followed suit.

Other recent moves in the UK — such as imposing larger minimum repayments — have already taken hold with the Senate committee, which will begin its third round of hearings in Canberra on Tuesday morning.

SocietyOne chief executive officer and co-founder Matt Symons. Picture: Supplied.Source:Supplied

“The strong and consistent message we got from the first two hearings was that lifting minimum repayments would help everyone,” said committee chairman Senator Sam Dastyari.

“Both regulators and consumer advocates are in furious agreement that our banks are playing us for mugs on this issue and that things are much better in the UK.

“It should be simple for banks to set a minimum payment that ensures a debt does not increase.

“By all accounts the changes the UK introduced have been effective, and we look forward to hearing more about them.”

Labor Senator Sam Dastyari chairs the Senate inquiry into credit card interest rates. Picture: Kym SmithSource:News Corp Australia

G&C’s 5.99 per cent personal loan is available to applicants who achieve 990 or more at GetCreditScore. Only one in 20 people would achieve such a rating. The 15.99 per cent rate applies to a similar proportion of the population. The average is about 700.

G&C is based in Sydney and has 10 branches in NSW and Victoria. Until a year ago it was known as the State Government Employees Credit Union. It has about 34,000 members.

SocietyOne is part-owned by News Corp Australia and other backers include James Packer and the Stokes family.