Credit cardholders could save $500 every year with low rate cards

Even while the lowest rate credit card could save the average credit cardholder $466 in fees and interest every year, there aren't enough options for consumers to choose from, according to the latest data collected by Mozo.

After looking at 171 credit cards from 57 providers to reveal the cheapest low rate cards on the market, Mozo found there are only six cards charging ongoing interest rates below 10%.

“While it’s great to see a handful of low rate cards providing great value, it’s not enough to drive competition or provide enough choice for consumers,” said Mozo Director Kirsty Lamont.  

“The average credit card rate is 17.55% yet a huge 54% of cards have an interest rate over and above 18%”.

According to Mozo, the cheapest low rate credit card charges just 7.99% interest and costs $1,942 to maintain over five years. The average cost over five years is $4,273 while about a third of cards in the Mozo database cost more than $5,000 over that time. Mozo’s money experts found 10 low rate cards as offering great value but none of them are from a big bank.

“Credit Unions and Mutuals have really stepped up to the plate when it comes to low purchase rates and low annual fees, while the big banks don’t rate a mention,” said Lamont.

Mozo’s pick of Australia’s cheapest credit cards  

“While premium and rewards credit cards have dominated the market in recent years, there is still a great need for low rate cards and we’d like to see a lot more of them,” said Lamont.

Top 5 Low Rate credit cards Versus the Big 4

For a full list of Mozo’s Experts Choice Credit Card winners and award criteria, click here.