Defiant credit card interest rates

Wednesday 19 June 2013

Article by Mozo

Despite the 2 percent drop in the official interest rate since November 2011 the average credit card interest rate has dropped just 0.15 percent over the same period reports Fairfax Media.

Women with headache from credit card interest

Home loan interest rates have seen an average cut of around 1.7 percent down to an over all average of around 5.52 percent since late 2011, close to the Reserve Bank of Australia's 2 percent cut on the official cash rate. Over the same period the average credit card interest rate has fallen just 0.15 percent to an average rate of 19.55 percent.

Lenders argue that credit card interest rates rely less on the RBA's official cash rate and will always be more expensive due to the risk associated with the unsecured debt.

However the claims seem dubious when taking the example of low interest rate credit cards that are devoid of reward schemes and other perks. When the RBA rose interest rates from 3 percent up to 4.75 percent in late 2010, low interest rate credit cards rose by almost the same amount. But since official rates went into a downward cycle in 2011 and dropped by 2 percent, low interest rate credit cards seem to have dissociated themselves with the official cash rate with the average rate dropping just 0.3 percent.

Credit card owners do not have to put up with their bank giving them a lousy rate and by comparing credit cards on Mozo they could find themselves a far better deal.

Have a question about credit cards? Ask us here.

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