Are you among the 48% of Australians who’ll fail this simple test?

Last month in our money wasters expose we revealed that credit card interest was our nation’s biggest money waster topping a massive $6.16 billion. And so it comes as little surprise to learn that in a recent survey conducted by CHOICE, 48% of people surveyed had no idea what interest rate they are paying on their credit card.

So, we challenge you. No peeking at credit card statements or bank websites now. What interest rate do you pay on new purchases on your credit card?

Unsure? Well, you’re not alone but it is definitely time to find out and act if you’re getting fleeced.

The average credit card interest rate is currently 17.16% but for rewards credit cards it’s a staggering 19.32%. Compare that to the market’s lowest rate credit card, Community First’s McGrath Pink Visa at 9.25% – and it is easy to see why the banks are making a killing.

Let’s look at the following scenario. Say you plan to spend $3000 on new household furniture. If you stick with the average rewards credit card (19.32% + $50 annual fee) making $300 monthly repayments, you will pay off the debt in 11 months at a cost of $347.00 in interest and fees. But switch to the lowest rate card and the same debt will only cost you $183.00, a saving of $163.00.

Who would you rather get that extra $163.00, you or the bank?

No one is suggesting that you ditch your credit card altogether, just be more mindful of the interest rate you are paying and don’t be afraid to switch to a cheaper card. There’s really isn’t any good reason for paying sky high interest rates on your credit card particularly when there are so many lower cost options available that do the exact same thing (ie. let you buy now and pay later) as their higher interest counterparts.

Some top low rate contenders include:

Community First McGrath Pink Visa

  • 4.99% interest rate for 6 months, then 9.25%

  • 4.99% Balance Transfer Rate for 6 months

  • $40 annual fee

Greater Building Society Greater Visa

  • 9.25% interest rate

  • $40 annual fee

Bankwest Breeze MasterCard

  • 0% for 4 months, then 11.99%

  • 0% balance transfer for 6 months

  • $59 annual fee

Commonwealth Bank Low Rate Credit Card

  • 0% for 5 months then 12.99%

  • 5.99% balance transfer for 5 months

  • $78 annual fee ($48 if you are a comm bank customer)

 

[button color=”green” link=”http://mozo.com.au/credit-cards/low-rate” target=”_blank”]Compare more low rate credit cards[/button]

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Are you among the 48% of Australians who’ll fail this simple test? was last modified: July 27, 2015 by Mozo

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  1. frank ross irving · Edit

    can you tell me why the bank rate is 2.75% why can’t a credit card be 5% to 7% instead of 17% to 26%and why do we have to pay an annual fee I am a pensioner and
    the banks have all the old ways to do the job some are still in the 1400 and should be in the 2100 year so get rid of all the old foggiest ion the banks and get them all working
    I wil do them good.

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