Compare credit cards to avoid 'sneaky interest'
Australian consumers should compare credit cards to avoid being caught out by promotional offers, it has been suggested.
A money piece by the Sydney Morning Herald notes that while Virgin's new "no annual fee" credit card offers a rate of just 2.9 per cent a year for six months on debt transferred from another card, the rate reverts to 20.99 per cent at the end of that period.
Commenting on the offer, Rohan Gamble director of financial comparison site mozo.com.au, said: "It's a fairly sneaky trick for the balance transfer to revert to a rate higher than even the standard purchase rate."
"Seven months from now, customers will be paying 20-plus per cent on their debt – that's a sure-fire way of getting into trouble very quickly," he told the newspaper.
Mr Gamble urged people to look beyond company marketing and added that if consumers do not pay their cards off in full every month and thus incur interest charges, cards with special offers and rewards will not be for them.
Meanwhile, Carolyn Bond, co-CEO of Melbourne's Consumer Action Law Centre, recently argued that some institutions are pressuring people into opting for bankruptcy too quickly.
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