Did you know the government is giving you free money to pay off your credit card debt? No, well luckily for you, analysing new government credit card legislation is a quirky habit of ours and we’re here to show you how to take advantage of the Government’s new credit card reforms and put $1000 back in your pocket.
Reforms, what reforms?
On July 1, the government introduced new credit card reforms that mean banks now have to use your monthly repayments to pay down the most expensive debt first, for instance the part of your debt attracting the highest interest rate rather than the cheapest. But the cost-saving reforms only apply to new credit card contracts, so if you want to make the most of the new reforms (and free money) you’ll need to switch to a new credit card.
$1000 in savings, really?
Yes! We crunched the data and found that switching cards to take advantage of the new repayments order will save the average cardholder with a $3,000 debt around $300. And then of course there’s the additional savings gained from switching to a cheaper card with lower rates. If you’re paying the average credit card rate of 17.5% and annual fee of $105, and making repayments of $100 a month, you can save up to $900 by switching to a cheaper card. All up that’s a massive $1,200 in savings!
Here’s some of the top low rate cards:
|Bank||Product||Intro Interest Rate||Interest Rate||Savings in interest and fees|
|Bankwest||Breeze MasterCard||1% for 6 months||10.99%||$904*|
|ANZ||Low Rate||0% for 3 months||13.14%||$632*|
|Virgin Money||Low Rate Credit Card||12.99%||$544*|
* over 3 years
How to switch credit cards in the time it takes to eat a sandwich.
1. Gather up your personal information (Time: 15 minutes) – For new credit card applications you’re likely to need your current credit card statement, driver’s license, employment details (contact details and length of employment) and financial details (income, expenses, assets).
2. Health Check your Card (Time: 5 minutes) – Run your current credit card through Mozo’s Credit Card Health Check tool to find the top cards that will save you the most in interest and fees.
3. Apply online for new credit card (Time: 10 minutes) – Click on the blue “go to site” button of your selected credit card provider on Mozo. Most banks now have online applications which should take around 10 minutes to complete.
MORE in this month’s Moneyzone:
The Australian government’s new “tick and flick” bank reforms have finally come into effect! To help you make the best of these government reforms, our Mozo rate chasers have scoured the market to find the best no fee, unlimited free transaction bank accounts. Read here to see our top picks!
We’re now halfway through 2012 and if those New Year’s financial resolutions fell off the rails long ago, now’s the time to get them back on track. Here are 5 top money saving tips that could see you pocket more than $1500 by Christmas!