Australians could save about $100 per year by switching their credit card to a lower interest option, according to new analysis that reveals the nation is paying $1.1 billion too much.
Finder unveiled its annual credit card rankings on Thursday, tracking which banks are offering the best plastic deals to families.
The average interest rate is 14.7 per cent and the average balance is $1392 for credit cards.
However, many Australians could save by switching to the lowest rates on the market, which start at just 7.49 per cent, according to Finder expert Amy Bradney-George.
“Once you get a credit card, it’s easy to forget that there could be a better deal out there. But interest rates vary wildly, with some cards charging upwards of 24 per cent for purchases,” she said.
“There’s also a wide variation in annual fees, which can cost you hundreds of dollars each year even if you pay off the card as you go.
“Given the cost-of-living crisis, no one with a credit card should have to pay for the cost of loyalty.”
Using 12 months worth of data, Finder has compiled a list of the best credit card offers on the market, including those with the lowest rates and the ones with higher rates but big rewards.
American Express’ low-rate credit card took out the top gong for the best low-rate card, with no annual fee and a 8.99 per cent interest rate during the research period, though this has now increased to 10.99 per cent.
Bankwest’s More World Mastercard had the best rewards, Finder said, giving customers 2.5 points per $1 spent on eligible purchases, without a cap.
NAB won the award for best balance transfer credit card with its 32-month, no interest deal and a waived annual fee in the first year.
“The balance transfer category is for people who want to pay off existing card debt interest free,” Ms Bradney-George said.
Pay credit cards off regularly
Budget expert David Rankin said Australians should be careful if they take out a credit card and make sure they pay their bills regularly to avoid high interest costs.
Ideally, you should pay down your entire credit card debt each month to avoid being slugged with any interest at all, he said.
But if you do find yourself unable to pay the bill, a balance transfer card could be a worthwhile option to consider.
“If you find yourself with a persistent ongoing balance, though, one possibility to change this debt to a lower interest rate is to do a no-interest, balance transfer credit application to a new card with another bank which offers this option,” Mr Rankin said.
“To proceed with a balance transfer application, your current card should not be maxed out, as you should never undertake a credit application from a position of financial stress or if you cannot afford the repayments on a new card.”
