Business overdraft interest rates are rising

Business interest rates are outpacing rises in the official Reserve Bank of Australia overnight cash rate.

Business lending data from credit research service CANNEX shows that many overdraft facilities at the five major banks are charging interest rates of more than 10% a year.

Business lending rates naturally vary due to specific business risks across the SME sector; the loan size and security will also explain some difference.

The data shows the rates are rising far ahead of the RBA base rate of 7.25% a year.

The table below highlights interest rates on a typical overdraft or line of credit. Most loan products mentioned below are residentially secured, typically the lowest rates in the market.

Bank

Product

Min rate (% p.a)

Max rate (% p.a)

Change from Jan 1

RBA

Overnight Cash Rate

7.25

7.25

+0.50%

ANZ

Business Overdraft Sec

9.42

10.8

+0.30%

Commonwealth

Bus Line of Cred Res Sec

8.67

8.67

+0.45%

NAB

Business OD res sec

10.58

10.58

+0.83%

Westpac

Bus Overdraft res sec

10.07

10.07

+0.47%

St George

Commercial OD

11.00

No max

+0.50%

A full table of business borrowing rates from CANNEX is below.

Credit card rates are also on the rise as the major commercial banks seek to cope with higher wholesale funding costs. Late last week The Australian Financial Review reported that market leader Westpac has raised the annual charge on some of its most popular credit cards to 20.74%, an increase of between 0.35% and 0.5%.

The Commonwealth Bank has raised rates to 20.44% on the popular Awards Card, Gold Card and Platinum Card.

The banks are blaming the rising cost of credit for the rises.

Dennis Orrock of InfoChoice says: “Sure the wholesale funding rates have gone up but obviously they’re maintaining margins – and they’re certainly not taking a cut there at all.”

 

Rate changes since beginning of 2008

<><><>
Company Product name Minimum rate % Maximum rate % Change +/- %
ANZ Bank Business Credit Facility 10.35 10.35 + 0.3000
10.7 10.7 + 0.3500
Business Overdraft Sec 9.42 11.05 + 0.3000
9.42 10.8 + 0.3000
Business Overdraft Unsec 9.42 15.45 + 0.3000
9.42 15.2 + 0.3000
9.77 15.75 + 0.3500
9.77 15.5 + 0.3500
Commonwealth Bank Bus Line of Cred Oth Sec 10.15 No max + 0.4500
Bus Line of Cred Res Sec 8.67 8.67 + 0.4500
Bus Overdraft (all sec) 10.07 No max + 0.4500
Business OD (res sec) 10.07 10.07 + 0.4500
NAB Business OD (all sec) 9.7 14.2 + 0.1500
9.99 14.49 + 0.2900
10.28 14.78 + 0.2900
10.38 14.88 + 0.1000
Business OD com sec 10.9 10.9 + 0.1500
11.19 11.19 + 0.2900
11.48 11.48 + 0.2900
11.58 11.58 + 0.1000
Business OD res sec 9.9 9.9 + 0.1500
10.19 10.19 + 0.2900
10.48 10.48 + 0.2900
10.58 10.58 + 0.1000
St George Bank Business Maximiser 9.17 No max + 0.2500
9.42 No max + 0.2500
Comm Line of Credit 10.42 No max + 0.2500
10.67 No max + 0.2500
Commercial Overdraft 10.75 No max + 0.2500
11 No max + 0.2500
Westpac Bus Overdraft bus sec 9.7 11.6 + 0.1000
9.95 11.85 + 0.2500
10.07 11.97 + 0.1200
Bus Overdraft com sec 9.7 10.45 + 0.1000
9.95 10.7 + 0.2500
10.07 10.82 + 0.1200
Bus Overdraft res sec 9.7 9.7 + 0.1000
9.95 9.95 + 0.2500
10.07 10.07 + 0.1200

Cannex

 

Trending

COMMENTS

Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments