Plas­tic on chop­ping block for con­sumers

Townsville Bulletin - - NEWS - TIM MCIN­TYRE

AUSTRALIANS are fed up with credit card in­ter­est rates and ready to cut up the plas­tic for good, a new study re­vealed.

A finder. com. au sur­vey of 2004 peo­ple found one in 10 card hold­ers are con­sid­er­ing get­ting rid of them due to ex­ces­sive in­ter­est, de­spite rates be­ing at record lows else­where in the econ­omy.

Around 16.7 mil­lion credit cards are thought to be in use in Aus­tralia, mean­ing 1.5 mil­lion may soon be binned.

Stan­dard credit card rates have av­er­aged above 19.5 per cent since 2011, de­spite the RBA low­er­ing the of­fi­cial cash rate 12 times; from 4.5 to 1.5 per cent, finder. com. au spokes­woman Bessie Has­san said.

“Australians are bet­ter at pay­ing off their credit cards and should be re­warded for this with lower in­ter­est rates,” she said.

RateCity sta­tis­tics show only six out of 184 credit cards on the mar­ket have a rate be­low 10 per cent. Spokes­woman Sally Tin­dall said frus­trated con­sumers have other op­tions.

“Most trans­ac­tion ac­counts give you the abil­ity to pay via Visa, MasterCard and PayPal,” Ms Tin­dall said. “The main dif­fer­ence be­tween a credit card and a trans­ac­tion ac­count these days is that a trans­ac­tion ac­count draws money from your own funds, rather than your bank’s so it’s harder to find your­self in debt.”

If you want to ditch your card but have money ow­ing, Ms Tin­dall sug­gests trans­fer­ring the bal­ance owed to a dif­fer­ent prod­uct, like a per­sonal loan.

“They have rel­a­tively low in­ter­est rates and a struc­tured pay­ment plan that will see you debt- free within a set time frame,” she said, ad­ding that per­sonal loans were good for larger pur­chases that would oth­er­wise need a credit card; like a fridge, or ren­o­va­tion.

“If you know you have trou­ble pay­ing off debt, avoid the temp­ta­tion of a zero per cent bal­ance trans­fer card. Hop­ping from one card to the next is rarely the an­swer un­less you have read the fine print care­fully and are ex­tremely dili­gent about pay­ing it off ( in the no- in­ter­est pe­riod).”

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