Whether you overindulged during some retail therapy or had a large and unexpected bill, credit card debt has a way of creeping up on us. According to new Mozo research, 51% of Aussies incurred debt over the recent festive season with one in two concerned as to how they’re going to pay it off. But the good news is, you don’t have to just let it sit there accruing interest. In fact if you’re ready to put an end to your mounting debt, there is a way to do it interest-free. A balance transfer credit card allows you to move the balance on your current credit card onto a card with a 0% interest rate for a fixed period of time. If you’re thinking about picking one up, we’ve rounded up four offers to get your search started.
Although the festive season has well and truly passed, new Mozo research has found that some Aussies have been left with a reminder they’d rather forget. We found that 52% of Australinas used a credit card to get through the Christmas period, with one in two (56%) concerned about how they are going to pay it off. Despite the Buy Now Pay Later (BNPL) boom, only 10% of shoppers opted to use BNPL to manage their Christmas spending. “Although there has been a lot of hype around the popularity of buy now pay later services, it seems that when it comes to the crunch credit cards are still one of Australia’s most popular forms of payment, particularly when it comes to spreading the cost of Christmas” says Mozo Director, Kirsty Lamont. Mozo’s findings come as the latest figures from the RBA revealed that the country collectively has $20.16 billion worth of credit card debt. Lamont suggests to Aussies struggling to get on top of their credit card debt to consider a balance transfer credit card. These are credit cards which feature 0% interest for a fixed period of time. “Credit cards can be a useful way to manage multiple purchases however, if you’ve gone overboard and need to get respite from high interest charges to help get back in the black, balance transfer offers are worth looking at,” says Lamont.At the time of writing, there are 82 balance transfer deals available in the Mozo database, with zero interest offers ranging from 6 to 30 months. Following a quick number crunch, Mozo found that a 12 month balance transfer credit card could save a customer $679 on a debt of $4,200.
Popular bank and credit card provider Citi is calling it “business as usual” as customer spending made a comeback in February. According to the bank’s recent Credit Card Index, the daily average spend last month spiked by 28%. This is after a 19% drop in January. “As anticipated, spend has increased significantly in February following January's holiday season spending hangover,” said Choong Yu Lum, head of credit cards at Citi Australia. “February’s 28% spike in daily spend has recovered of pre-COVID levels, indicating the new year is in full swing and consumers are making the most of a predominantly lockdown-free month.”The numbers also revealed that Aussies are spending more on life administration, with less focus on leisure activities. In fact, Citi recorded a massive 80% increase in spending on Legal and Tax Services.
Used to consider yourself a bit of a credit card rewards points guru? Dedicated your time to gathering up points with every purchase and then spending them on overseas holidays and flight upgrades? Boy, doesn’t that seem like a thing of the past. The truth is, when it comes to travel there are a lot of unanswered questions. While vaccines have just hit Aussie shores, it seems like we are still a fair way away from international travel being an option for a trip away. So the question is: are rewards credit cards really worth it in 2021 without overseas travel? Our answer - they can be.
In December 2020, CommBank launched its interest-free credit card Neo with the hopes of reeling in younger Aussies who feared the classic credit card. And according to recent figures from the major bank, they’ve managed to knock that task out of the park. CommBank found that one third of all credit card approvals in December were for the Neo interest-free credit card, while the bank notes that more than half of the card’s uptake alone, came from millennials. A quick recap: the CommBank Neo credit card features no interest rate or late payment fees. In exchange for this, customers are charged a monthly fee based on their chosen credit limit. The credit card fees and limits are as follows:
If you never say no to a perk, you might be considering picking up a rewards credit card. These are credit cards that allow you to earn points on your everyday spending which can be redeemed for a range of rewards. The good news is that many rewards credit card providers generally offer bonus point offers for new customers, which can range between 50,000 to a whopping 200,000. This can be a great way to kickstart your points balance and get you well on your way to picking up some flashy rewards. To get your search started, we’ve rounded up three rewards credit cards with some snazzy bonus points offers.
During the height of the Covid-19 pandemic, credit card spending had reached a plateau. But according to new research from Citi, Aussies across the country are slowly getting back into the swing of things. The credit card issuer found that although credit card spending had fallen by 19% in January, spending in December was almost at pre-Covid levels. “Consumers are experiencing a spending hangover, after doing their bit to boost the economy during the November and December silly season,” said Head of Credit Cards at Citi Australia, Choong Yu Lum. “This is in line with expected spend for January, as consumers typically tighten their belt following a period of increased spending due to Christmas and school holidays.”And according to Citi, what we’re using our plastic for has also changed between December and January. RELATED: Credit card spending to pick up as Christmas nears, says Citi
Whether it’s to pay for big ticket items or to support yourself through a financial emergency, there are all sorts of reasons why you might be considering a credit card this year.But while credit cards can help you out of a bind, the flipside is they could also lead you down a rabbit hole of debt, if not managed responsibly. Credit Counsellors Australia’s senior insolvency officer, Matt Shepherd says a mistake many people make is that they treat their credit card as ‘free money’ rather than borrowed money. “We find that when people pretend like their debt isn’t there, that’s when it can really get out of hand. Due to interest and things like [late fees], a couple hundred dollars can turn into a thousand dollars very quickly,” he says. The good news though is that you can use a credit card without ever falling into debt. All it takes is practising healthy money habits, such as sticking to a solid repayment plan and being proactive with your plastic - that might mean knowing your interest rate, reducing your credit limit or switching to a more suitable card.We spoke to three personal finance experts about their top tactics for staying debt-free over 2021. Here’s what they had to say.
If we were to ask you for your phone number, you could tell us in three seconds. But what about if we wanted to know your credit card interest rate?According to new research from Defence Bank, one in three Aussies don’t know their credit card rate. Of those Aussies, four out of five didn’t realise their interest rate was above 10%, while some owed a card with a rate above 20%. “It’s time to break the cycle of paying unnecessarily high credit card interest rates. Australian consumers need to stop paying 20% for the convenience of a basic credit card, when genuine low-rate options exist for half the cost,” said Defence Bank chief executive officer, David Marshall. Concerningly, more than half (60%) of respondents admitted they don’t pay much attention to the rate on their card, while one in four carry a balance sometimes throughout the year. The data also found that Aussies are losing faith in rewards credit cards, with one in two believing the rewards programs are generally not good value for money. “We see from these results that Australians are frustrated by the rates they’re paying and the bells and whistles they either can’t use or don’t need,” says Marshall.
If 2021 is the year you say goodbye to lingering credit card debt, you might be considering picking up a balance transfer credit card. A balance transfer credit card allows you to transfer credit card debt you’ve built up over the years onto another card with a 0% interest rate - for a certain period of time. If used correctly, these cards do a fantastic job at saving you on interest and other fees you might be paying with your current card. Want to find out what’s on offer in January? Check out our top three balance transfer picks below!