The change in policy is seen as a blatant cash-grab by the company which is already making about $18 million a day in profit.
Westpac has written to all of their credit card customers advising that “interest will also apply to interest charges and fees on your credit-card account”from June.
Choice spokesman Christopher Zinn was critical of the change.
“I think interest on interest is sneaky,” he said last night.
A spokeswoman from Westpac defended the change, arguing that for an average customer with a $3600 balance would only be paying an extra 67c a month in interest.
“We are only bringing our approach into line with industry practice.” She said. “It’s not a huge difference and it’s no different to how any of the other banks do it.”
Countering the claim that this was ‘industry practice’ w spokeswoman for NAB pointed out that while the bank did charge interest on interest, it did not also charge interest on things like late payment fees, as Westpac has announced.