Mozo urges caution over balance transfer cards
Financial comparison website Mozo has warned Australians with high credit card debt to think carefully before opting for a special low rate balance transfer.
The site said that while Australia’s major banks seek to lure customers with such an offer, the most important factor to consider is not the interest rate but the speed in which the debt holder intends to pay off the balance.
Taking an average credit card balance of $3,000 and comparing this with a standard Big Four bank credit card, Mozo used its award-winning health check tool to test three common repayment scenarios.
For customers only making the minimum monthly repayment, Mozo found that the best option is to go with a balance transfer card with a low rate for the life of the balance transfer such as the CUA Rewards, IMB Rewards and Community CPS Rewards Card.
Meanwhile, the comparison website found that bank customers wishing to pay off their credit card balance over a year or two should switch to a low rate card such as the BankWest Zero card which has a low 1.99 per cent rate for 12 months and no annual fee.
In scenario three "paying it off fast" Mozo said that people wanting to get rid of debt within six months could opt for a number of cards with a low six month balance transfer offer and no annual fee in the first year including the BankWest Zero card and ANZ First card.
Rohan Gamble, managing director of Mozo, said: "We are urging Australians to firstly think about their ability to repay their debt before choosing a new credit card. Too often they are lured into special deals and find themselves repaying sky-high interest rates once the introductory period ends."
This article is brought to you by Mozo helping you compare low rate credit cards