Do you feel supported by your credit card provider?
According to new Experian research, 60% of Australians feel creditors and lenders successfully provided financial assistance to those experiencing hardship during the 2020 COVID downturn.
That said, over half of those surveyed also feel that support from financial institutions is even more essential today than it was last year.
Australians are currently sitting on around $20 billion in credit card debt that is accruing interest, according to RBA data released July 2021. Although this has reduced by almost a third over the last three years, that reduction has been stagnant from mid-2020 onwards.
Additionally, June is the first month that the Australian Bureau of Statistics (ABS) has reported a percentage decline in fixed-term personal loans in 2021. Despite the decline, it still recorded a 16.9% increase on June 2020, at almost $1.75 billion in loan commitments.
With such an accelerated rate of borrowing right up until the most recent lockdowns, this is a potential point of concern, as many face sudden financial difficulties caused by COVID restrictions.
Experian’s Australia and New Zealand general manager of decision analytics, Mathew Demetriou, explained that “as several states in Australia entered lockdowns, we once again saw lenders step up to offer more flexible plans to those in need.”
“For example, one Big Four bank extended its freeze on foreclosures for customers unable to meet their loan repayments, while another offered credit card repayment and interest rate reductions,” he said.
But many of the Experian survey respondents felt that credit providers and lenders could do more to support their customers during these tough times.
One specific area of improvement that they cited was that creditors should be more easily contactable through multiple modes of communication.
Is your lender contactable?
The people surveyed believed that it was important for creditors and lenders to be available to their customers during times of potential financial hardship.
- 20% think there are not currently enough ways for them to communicate with their provider.
- Over 30% of Australians think offering a mix of digital, and over phone is best.
- Another 20% would prefer to only chat to someone over the phone.
- Interestingly, 1 in 5 would prefer to seek support through digital channels only.
“Whether a person is in hardship or facing hardship, it is critical that credit providers offer multiple channels of support, including self-service options,” said Demetriou. “For example, asking for support through digital channels is often less confronting than speaking to someone over the phone.
“Credit providers who are able to understand the preferences of a customer can create a far more personalised service. This helps to reduce the friction when addressing financial stress, which in turn, could help put people on the path to recovery from hardship more quickly.”
Is your bank or lender looking out for you?
Experian’s research also revealed that many consumers are not aware that some creditors and lenders can predict financial stress before customers miss a payment.
- 44% of respondents think credit providers can only identify if they face hardship when they default on a payment.
- One fifth believe that they must reach out to the lender or creditor themselves.
- While 1 in 10 Australians think things like a change in income or spending habits can act as a trigger for lenders.
Missing a payment is, in fact, not the only way for credit providers and lenders to identify if someone could face money trouble in the near future.
Possible triggers that financial institutions look out for include: a loss or drop in income, greater reliance on savings, a shift in spending to high priority items, and an appetite for high-cost loans.
“To help identify early signs of financial stress, it’s so important for credit providers to be able to see all of the financial products a customer has across different financial institutions, as a customer may look healthy in one portfolio but looks different in another portfolio,” added Demetriou.
Would you want your finances monitored?
The research also showed that, knowing it was possible, one half of Australians wish credit providers and money lenders would proactively monitor their customers’ financial health to help prevent people from falling into financial hardship.
However, 80% admit they do not know if their provider currently provides this service.
“Proactive assessment doesn’t just show genuine care for customers and cement your reputation as a fair and socially responsible business, it is crucial in being able to identify and assist those who may be financially vulnerable and at risk of facing hardship.
"Ultimately it helps lenders make appropriate lending decisions for each individual and offer the right support at the right time, while also giving customers confidence they are supporting them at all times,” said Demetriou.
Looking for a credit card provider you can trust? Head over to our credit card comparison hub to see the top August 2021 credit card offers and compare over 200 cards from 60 providers.
Compare credit cards - last updated 19 April 2024
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NAB Low Rate Card - Balance Transfer Offer
Spend with confidence with a low 13.49% p.a. variable purchase rate and 0% p.a. interest on balance transfers for the first 28 months (T&Cs apply). 2% balance transfer fee applies. There’s also up to 55 interest free days on purchases to help you manage your budget better when you make minimum repayments. Minimum credit limit $1,000. No annual fee for the first year (usually $59).
Purchase rate
13.49% p.a.Balance transfer rate
0% p.a. for 28 months and then 21.74% p.a. (2.00% balance transfer fee)Annual fee
$59 $0 in the first yearCompareCompareLow Rate Card - Balance Transfer Offer
Spend with confidence with a low 13.49% p.a. variable purchase rate and 0% p.a. interest on balance transfers for the first 28 months (T&Cs apply). 2% balance transfer fee applies. There’s also up to 55 interest free days on purchases to help you manage your budget better when you make minimum repayments. Minimum credit limit $1,000. No annual fee for the first year (usually $59).
- Purchase rate
- 13.49% p.a.
- Balance transfer rate
- 0% p.a. for 28 months and then 21.74% p.a. (2.00% balance transfer fee)
- Annual fee
- $59 $0 in the first year
- Purchase rate
- 13.49% p.a.
- Intro purchase rate
- -
- Balance transfer rate
- 0% p.a. for 28 months and then 21.74% p.a. (2.00% balance transfer fee)
- Cash advance
- 21.74% p.a.
- Interest free days on purchases
- 55
- Intro fee
- 0.0
- Foreign exchange margin
- 3.00%
- Annual card fee
- $59 $0 in the first year
- Late payment fee
- $15.00
- Cash advance fee
- 3%, Min $3
Read our Mozo Review to learn more about the NAB Low Rate Card - Balance Transfer Offer
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American Express Low Rate Credit Card
Competitive low rate with $0 Annual Fee. Offers Card Refund Cover and Card Purchase Cover. Must have no history of bed debt or payment default, be aged 18 years and over, and be an Australian citizen, permanent resident, or hold a long term visa.
Purchase rate
10.99% p.a.Balance transfer rate
No current offerAnnual fee
$0CompareCompareLow Rate Credit Card
Competitive low rate with $0 Annual Fee. Offers Card Refund Cover and Card Purchase Cover. Must have no history of bed debt or payment default, be aged 18 years and over, and be an Australian citizen, permanent resident, or hold a long term visa.
- Purchase rate
- 10.99% p.a.
- Balance transfer rate
- No current offer
- Annual fee
- $0
- Purchase rate
- 10.99% p.a.
- Intro purchase rate
- -
- Balance transfer rate
- No current offer
- Cash advance
- -
- Interest free days on purchases
- 55
- Intro fee
- -
- Foreign exchange margin
- 3.00%
- Annual card fee
- $0
- Late payment fee
- $30.00
- Cash advance fee
- 2%, min $2.50
Read our Mozo Review to learn more about the American Express Low Rate Credit Card
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HSBC Low Rate Credit Card
Purchase rate
12.99% p.a.Balance transfer rate
0% p.a. for 12 months and then 25.99% p.a. (2.00% balance transfer fee)Annual fee
$99CompareCompareLow Rate Credit Card
- Purchase rate
- 12.99% p.a.
- Balance transfer rate
- 0% p.a. for 12 months and then 25.99% p.a. (2.00% balance transfer fee)
- Annual fee
- $99
- Purchase rate
- 12.99% p.a.
- Intro purchase rate
- -
- Balance transfer rate
- 0% p.a. for 12 months and then 25.99% p.a. (2.00% balance transfer fee)
- Cash advance
- 25.99% p.a.
- Interest free days on purchases
- 55
- Intro fee
- -
- Foreign exchange margin
- 0%
- Annual card fee
- $99
- Late payment fee
- $30.00
- Cash advance fee
- 3%, min $4.00
Read our Mozo Review to learn more about the HSBC Low Rate Credit Card
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Australian Unity Low Rate Visa Credit Card
Purchase rate
9.90% p.a.Balance transfer rate
No current offerAnnual fee
$59CompareCompareLow Rate Visa Credit Card
- Purchase rate
- 9.90% p.a.
- Balance transfer rate
- No current offer
- Annual fee
- $59
- Purchase rate
- 9.90% p.a.
- Intro purchase rate
- -
- Balance transfer rate
- No current offer
- Cash advance
- 18.99% p.a.
- Interest free days on purchases
- 45
- Intro fee
- -
- Foreign exchange margin
- 3.00%
- Annual card fee
- $59
- Late payment fee
- $10.00
- Cash advance fee
- $5.00
Read our Mozo Review to learn more about the Australian Unity Low Rate Visa Credit Card
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MOVE Bank Low Rate Credit Card
Purchase rate
8.99% p.a.Balance transfer rate
0% p.a. for 6 months and then 8.99% p.a.Annual fee
$59 $0 in the first yearCompareCompareLow Rate Credit Card
- Purchase rate
- 8.99% p.a.
- Balance transfer rate
- 0% p.a. for 6 months and then 8.99% p.a.
- Annual fee
- $59 $0 in the first year
- Purchase rate
- 8.99% p.a.
- Intro purchase rate
- -
- Balance transfer rate
- 0% p.a. for 6 months and then 8.99% p.a.
- Cash advance
- 12.99% p.a.
- Interest free days on purchases
- 45
- Intro fee
- 0.0
- Foreign exchange margin
- 2.00%
- Annual card fee
- $59 $0 in the first year
- Late payment fee
- $15.00
- Cash advance fee
- $5.00
Read our Mozo Review to learn more about the MOVE Bank Low Rate Credit Card
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