Cheap­est Credit Cards


Money Magazine Australia - - CONTENTS -

If you choose care­fully, you won’t be sad­dled with a daunt­ing debt

The way we use credit cards is chang­ing. Not only do card is­suers now com­pete with other pay­ment meth­ods, in­clud­ing dig­i­tal wal­lets such as After­pay, but a Re­serve Bank of Aus­tralia (RBA) re­port found that home­own­ers are in­creas­ingly us­ing the re­draw fa­cil­i­ties and off­set ac­counts at­tached to their home loans to fund larger pur­chases. The re­sult is that only 62% of to­tal card debt at­tracts in­ter­est, down from 72% 10 years ago.

The bad news is that RBA found that younger and low­er­in­come Aus­tralians, es­pe­cially those who rent rather than own their home, make up the largest share of card­hold­ers who have an out­stand­ing card debt.

If you reg­u­larly owe money on your card, it makes good fi­nan­cial sense to look for a credit card with a low rate, and there is a tremen­dous vari­a­tion. RBA fig­ures show the av­er­age rate across all credit cards is a whop­ping 19.75%. But among low-rate cards this av­er­age falls to 13%. As our results show, it is pos­si­ble to pay con­sid­er­ably less, with all of our win­ners charg­ing be­low 10%.

Nexus Mu­tual romps into first place among the non-banks with a rate of just 6.64%. But there is a catch. Mem­ber­ship of Nexus Mu­tual is only open to di­rect em­ploy­ees (and their fam­i­lies) or con­trac­tors of the ExxonMo­bil group.

North­ern In­land Credit Union took out the award last year and its Low Rate Visa of­fers good value, with the same low pur­chase rate of 8.99% also ap­ply­ing to cash ad­vances. With­out the op­tion of balance trans­fers, it could be an ideal first or ex­tra card. The min­i­mum credit limit is $1000.

The Amer­i­can Ex­press Low Rate credit card is avail­able if you have an an­nual in­come of $50,000 or more. A balance trans­fer op­tion is avail­able for up to 70% of your ap­proved credit limit.

Our win­ner among the banks, G&C Mu­tual Bank, also took out this award last year. The cash ad­vance rate rises to 15.49% and the min­i­mum credit limit is $1000.

Auswide Bank of­fers some in­ter­est­ing fea­tures with its Low Rate Visa. The cash ad­vance rate is the same as the pur­chase rate, and a “rate tracker” fea­ture means the card rate only ever goes up or down with the RBA cash rate. Credit lim­its start at just $500 and the an­nual fee is waived if you are un­der 25 years of age.

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