Switch or ditch to be in card control

CREDIT card users who are unable to wipe their debts each month should look to switch to a low-rate card or ditch plastic altogether.

Recent statistics released by the Productivity Commission found 40 per cent of Australians failed to pay off their card debts each month. This is a costly exercise, because card-holders could be hit with interest charges of up to 24.99 per cent.

New analysis by financial comparison website Mozo found there are nearly 200 credit cards available, with some rates at just 8.99 per cent.

Credit card “revolvers” – those who cannot wipe their debt each month – have been warned to rethink how they use their cards or ultimately stop using them altogether.

Reserve Bank of Australia data showed card-holders owed a massive $51.6 billion. Of that, more than $32.6 billion was accruing interest.

Mozo’s spokeswoman Kirsty Lamont said it’s easy to switch cards and could be all done online with the click of a mouse.

“Australians just put up with paying sky-high credit card interest rates because they have been led to believe all credit cards are overpriced,” she said.

“Many of us just don’t realise there are a number of ultra-low cards on the market, so we can make significant savings on a low-rate card.”

Some credit card customers may be unaware that even if they pay some of their card debt off each month, they are still left with interest owing on the total monthly balance.

Tribeca Financial’s chief executive officer Ryan Watson warned, “anyone who can’t pay off their credit card each month should cut it up immediately”.

He said plastic users should also consider using alternative credit card methods such as balance-transfer cards. This is a credit card where you transfer one card debt to another and enjoy an interest-free period, which helps wipe debt quicker.