Looking to tighten your budget? Switching to a new credit card could help you out
After a long period of COVID restrictions, Aussies are having to find a new normal in an economy hit by rising consumer prices, supply chain issues and inflation. So, it’s not surprising that many people are tightening their budgets and looking for new ways to save.
While it is important to consider the associated fees and costs when taking out a new credit card, a new card can also be a great way to cut down monthly fees or pay down existing debt. Let’s consider some examples.
The current average credit card interest rate in the Mozo database is 17.00% p.a., and it’s even higher, at 19.95% p.a. for rewards credit cards.
The current lowest credit card interest rate in the Mozo database is 7.49% p.a., over 9.50% lower than the average. So, switching from your current credit card to a low rate card could save you a lot of money annually.
A balance transfer is when you take the existing debt you've built up on a credit card and move it to a new credit card at a much lower interest rate, often even 0%.
Even a low interest rate can add up fast if you're carrying over a balance. A balance transfer temporarily removes the interest repayments. So, as payments only go towards wiping the balance away, you can repay that debt faster.
The current average balance transfer offer length in the Mozo database is 17.25 months, with the shortest being 6 months and the longest being 36 months.
Much like with 0% interest rate offers, once the limited period is up, the rate on your balance transfer usually reverts to the cash advance rate. You should also remember that there is sometimes a balance transfer fee, generally ranging from 0% to 3% of the transferred balance.
If you’re looking to cut your credit card rate, check out some top low rate and balance cards below:
Bendigo Low Rate credit card
- Low $45 annual fee
- 0% p.a. purchase rate for first 20 months (low 11.99% p.a. after)
- 0% p.a. Balance transfer rate for 20 months (2% BT fee)
The Bendigo low rate credit card could be a great option if you want to cut down your monthly credit card bills. If you apply before July 31, 2022, you can receive an introductory 0% purchase rate for the first 20 months. After that, the rate reverts to a very competitive 11.99% p.a., with up to 55 interest free days. Bendigo Bank also offers a fairly unique interest option, as interest is charged from when you receive your statement rather than when you initially make the purchase, which can save you on interest. Plus, the $45 annual fee won't break the bank, either.
Great Southern Bank Low Rate credit card
- 2021 Mozo Experts Choice Award^ winner
- Low 11.99% p.a. interest rate
- 33-month 0% balance transfer offer (no BT fee)
The Great Southern Bank Low Rate Credit Card comes with all the main features you might want in a budget-friendly credit card: a low 11.99% purchase rate, 55 interest free days and a 0% balance transfer fee for 33 months. Last year, it took a Mozo Expert Choice Award^ for best balance transfer credit card. Keep in mind, after the balance transfer period, the rate will shoot up to the steep cash advance rate of 21.74% p.a. So, it would be wise to have a payment plan in place to avoid having a leftover balance. There is no annual fee on this card for the first year, but there is a $49 fee for years thereafter.
St George Vertigo - Balance Transfer
- 2021 Mozo Experts Choice Award^ winner
- Competitive 13.99% p.a. interest rate
- 0% balance transfer offer for 32 months (No BT fee)
The St.George Vertigo Card has a competitive interest rate of 13.99% p.a., and cardholders have a leisurely 55 day interest-free period to make any repayments. The annual fee on the card is also a relatively low $55, plus St.George waives it for new customers for their first year. New cardholders who successfully apply by 30 June 2022 can take advantage of a 0% balance transfer offer. This offer is available for 32 months and comes with no balance transfer fee, which could be a useful option for anyone looking to pay off any of their existing credit card debt. Just keep in mind that any remaining balance transfer amount will be charged the cash advance rate after the 32-month period ends, so be sure to pay it off beforehand.
Westpac Low Rate credit card - Cashback Offer
- Up to $400 cashback
- 12-month 6.99% balance transfer offer (1% BT fee)
- 55 interest free days
Westpac's Low Rate credit card offers a relatively competitive 13.74% p.a. purchase rate and up to 55 interest-free days, so it has all the potential to be a budget-friendly option. Apply before 30 June 2022, and you could score up to $400 cashback when you take out a new Low Rate credit card and spend $1,000 on eligible purchases each month over the first four statement periods from card approval (conditions apply). Additionally, this option offers a 6.99% balance transfer offer for the first 12 months (1% BT fee, reverts to 21.49% p.a. cash advance rate).
^See information about the Mozo Experts Choice Credit Card Awards
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