Cherry pick and choose low interest credit card
A FIERCE war between credit card providers over interest rates could save customers thousands of dollars if they switch to the right card.
Single-digit credit card interest rates are the new black and lenders are flexing their muscles, announcing offers with purchase rates under 10 per cent, a far cry from the highest rate of 24.99 per cent.
And as Christmas edges closer shoppers will become more reliant on plastic, but experts are sending a strong warning to those who can’t pay off their debts in full each month to check their rate.
Just this month the nation’s largest lender, the Commonwealth Bank, announced it would be rolling out a new low-rate cut with an interest rate of 9.9 per cent on purchases. This follows in the footsteps of rival lender Westpac’s new Lite card, with the same rate.
But new analysis by financial comparison website RateCity shows there are many other single-digit interest rate deals available, including offers by smaller lenders including My Credit Union, Community First Credit Union, Bank Australia, G & C Mutual Bank and Victoria Teachers Mutual Bank.
Lender ING also rolled out a new credit card this year, the Orange One, which allows customers who make bigger purchases to pay them off in instalments at a rate of 9.99 per cent.
RateCity spokeswoman Sally Tindall has warned card users that if they have revolving credit card debt – debt that isn’t paid off in full each month – their card’s interest rate is critical.
“People are sticky when it comes to credit cards because of convenience, a lot of people have a credit card that’s tied to their home loan which means they get given one that their bank issued,’’ she said.
“Cherry pick the financial products best for your financial needs and don’t get sucked in by special deals if it’s going to mean you are going to be paying up to 25 per cent interest.”
RateCity figures show for a customer with the average card debt of about $4055, if their card has the highest rate at 24.99 per cent and they only make the minimum repayments each month it will take them 36 years to pay off.