According to Skander Malcolm, the chief executive of GE Capital Australia, throughout the next decade cash may be scarce due to the steadily increasing cost of capital. Mr. Malcolm asserts that cash will still be available to all who want it; however, the price of borrowing or the interest rate charged may be much higher than before the global economic crisis, when there was an abundance of liquidity in the market.

The central bank is expected to again raise interest rates, causing ripple effects throughout the economy. In efforts to manage their net income margins, banks consequently pass the increase in rates on to customers. Heavily affected by the change in rates will be mortgages and credit cards, and purchasing products and services on credit cards will be more expensive for consumers.

With guidance from the firm’s chief executive, analysts and consumers can expect a slight spike in interest rates on GE Capital credit cards, the core business line within GE Capital Australia.

Contrary to the public’s perception, the company does not charge exorbitant or inflated interest rates to its cardholders. The company claims that recently only 20% of its credit customers have paid any interest on their debts, while the remaining 80% have paid no interest. GE Capital is maintaining a low customer turnover ratio.

GE Capital, the second biggest issuer of credit cards in Australia, has recently commenced plans to continue its restructuring efforts, including the downsizing of the firm’s balance sheet. The company plans to continue as a leader in credit cards. Meanwhile, the company believes there is an abundance of opportunity in the financial services sector, specifically infrastructure. Home loans are an interest as the residential market reemerges.

Source: http://www.heraldsun.com.au