Avoid hefty interest costs Credit cards are an expensive habit for many of us, writes Sophie Elsworth

SAVVY credit card users looking to avoid paying hefty interest costs can do so if they are smart about the way they use plastic.

While credit card interest rates remain on average at 17.28 per cent, card users are getting slammed by high costs if they fail to pay off their card in full each month.

The nation’s exorbitant credit card balance has climbed to a giant $52.5 billion and nearly two thirds of this is accruing interest.

Analysis by financial comparison website Mozo has revealed that on the average card balance of $4400, users are getting stung by $63 in monthly interest charges if they cannot clear their card debt in full.

But for the smarter card users, Mozo’s spokeswoman Kirsty Lamont said there are some simple tricks to avoiding interest altogether.

“Paying interest is like throwing money down the drain, you really don’t want to be paying interest if you can help it,’’ she said.

“The average interest rate is above 17 per cent so the average card balance is attracting interest costs of more than $700 per year.”

Ways card users can escape interest costs include using interest-free days – there are now seven cards available on the market that have interestfree days spanning 62 days or the equivalent of nine weeks. Balancetransfer deals where you transfer one card debt to another and enjoy a lengthy interest-free honeymoon period of up to 24 months is also another way to avoid interest costs – if you pay your debt off during this time.

Earlier this year ANZ reduced interest rates on two of their cards by 2 per cent to 11.49 – its lowest rate since 2003.

The bank’s head of consumer cards Anuja Sivamalai said there are some easy behavioural tips that could save customers from paying interest.

“Set up reminders and direct payments to remove that balance or use your banker to make sure you are on top of when those payments are due,’’ she said.

“Check the terms of the interest-free periods because the days fluctuate.

“Depending on the type of product you have it will have different interest-free days.”

She urges consumers to limit the number of cards they have to keep on top of payments and warned them to be aware that promotional offers often revert to higher interest rates once these periods end.

Of the bank’s card customers, more than 50 per cent pay off their card in full each month, but across most cards customers are only required to make minimum repayments of 2 per cent of the card’s balance each month.