Tricks to wipe out card debt

RISK-averse Australians are getting a stranglehold on their credit card debt and slashing money owing at record levels.

Reserve Bank of Australia figures showed that in May cardholders wiped $1.64 billion off their card debts – the largest monthly amount ever – leaving balances accruing interest at $23.8 billion.

The number of accounts also fell in May by 1.22 million compared with the same time last year, showing the nation’s appetite to plastic is souring.

Consumers unable to pay their card off each month should be hunting for a low interest rate card. Analysis by financial comparison website RateCity showed the average credit card rate is 16.6 per cent, but some deals are 7.49 per cent.

The site’s spokeswoman Sally Tindall urged cardholders to try and take control of their card debt to reduce their hip-pocket pain. “One of the big steps people with credit card debt are taking right now is … getting that debt off their back for good,” she said.

“If you don’t use your card much and pay it back on time a no annual fee card can be useful.”

RateCity’s database found there were no annual rate cards with interest rates below 10 per cent. But despite the cash rate sitting at a record low of 0.25 per cent, credit card rates still remain stubbornly high.

JBS Financial Strategists CEO Jenny Brown said consumers should be paying attention to their credit card rates.

“You have to pay attention when the interest starts being charged and whether it’s from the date of purchase or the date of the next statement,” she said.

“You need to also be conscious of the annual fees and while some cards are attractive with points you need to know what are you paying for.”

Ms Brown also said people could be lured into balance-transfer credit cards, but end up being hit with high interest when the honeymoon period ends.

NO ANNUAL FEES CARD, LOW RATES

American Express, low rate credit card, 8.99 per cent

Heritage Bank, gold low rate, 10.8 per cent

Teachers Mutual Bank, teachers credit card, 11.5 per cent UniBank, Visa credit card, 11.5 per cent

BankVic, Visa silver, 11.95 per cent

Hume Bank, Value Visa, 11.95 per cent Source: Ratecity.com.au.