Does my credit card interest rate still stack up?

blue credit cards on pink background to compare interest rates

How long have you been using the same credit card

The convenience of sticking with the same card can be oh-so-tempting. You know how it works, you’re used to the fees, you’ve dealt with the bank before. If you’ve settled into a classic comfort zone situation, it could be time to take a look at what’s going on with your current credit card.

My credit card was great - what happened?

If you feel like the honeymoon period is over with your former favourite credit card, you might be right. No matter how carefully you researched the card that was right for you, if your card is more than a year old, a lot could have changed. 

Here are some things that might have happened:

  • Your first year annual fee was a special reduced offer. Many cards offer a cut on their annual fee for the first year, even higher level rewards cards. Some cards can lure you in with a fee-free first year and then hit you with a spike the next year.
  • You scored an awesome introductory interest rate. If you have a tendency to have some payments outstanding on your card, you might not have noticed with an introductory rate. Many cards give a special cut on their rates for the initial period - from a few months to nearly two years before jumping up to their regular rates.
  • Rates have gone up. It’s no secret that interest rates are on the rise across the board - and credit cards aren’t immune from that. What might have started as a competitive interest rate on your credit card might now be on the higher side.

In the meantime, other options have opened up. Before you stick with the card you know, it might be worth investigating your options.

What is a good credit card interest rate?

There is no hard and fast rule when it comes to “good” and “bad” credit card interest rates. 

The average interest rate for a rewards card in the Mozo database is 19.95%, considerably higher than the average interest rate for credit cards overall which sits at 17.02%. If your rate is sitting below that in either category, then you’d be doing pretty well. Rates that fall below 14% would be considered low rate cards, and are generally well-balanced with other fees.

There are also zero interest rate cards. Many newer cards are completely interest free, instead charging monthly account fees rather than a single annual fee. If the interest rate is a serious concern to you, these no-frills cards will keep you sorted for day to day spending.

On the flipside, higher interest rates often come attached to rewards cards and frequent flyer programs. If these are important to you, you might need to handle the cost of higher rates. If you make your card repayments on time and in full, you shouldn’t feel the sting. These can actually be worthwhile to you if you use the benefits, but if you don’t, you could be paying for rewards you aren’t accessing.

What happens if I want to switch credit cards?

Switching credit cards doesn’t have to be a drama.

If you have no outstanding debt on your existing credit card, or you’re looking to start fresh, applying for a credit card should be fairly straightforward - especially if you have good credit.

If you do have outstanding debt on your current credit card, you may want to look at balance transfer credit cards. These allow you to bring existing debt onto a new card at a low or 0% interest rate for an introductory period, making them the perfect way to transition as you pay off any outstanding money owing. 

There are lots of things to consider when choosing a credit card, more than just the interest rate. Credit cards come in a variety of types with associated features and fees, all of which are important to take into consideration when considering what move to make.

Want to find out if your credit card stacks up? Use our Credit Card Switch & Save calculator to see how yours compares. See Mozo’s top picks with the 2022 best credit cards.

^See information about the Mozo Experts Choice Credit Card Awards

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