Credit card loyalty costing Australians $1.6bn a year in interest, new figures reveal
Australians could save $1.6 billion a year in credit card interest if they switched to cards with lower rates, new research has revealed.
In its survey of more than 2,000 credit card holders, Canstar found that 31 percent had never reviewed their cards.
The analysis found Australians paid more than $3.4 billion in credit card interest, paying an average of 18 per cent of the $19.6 billion outstanding debt at the end of last year.
Switching to cards with interest rates of 10 per cent or less could halve credit card interest, saving Australians around $1.6 billion.
Canstar data insights director Sally Tindall said credit card loyalty was costing Australians $1.6 billion a year in unnecessary interest.
“Canstar research shows that one in three cardholders have never reviewed their credit card. In a market where rates range from 8.99 per cent to 28.49 per cent, it’s like handing your wallet to your bank and hoping for the best,” he said.
“Australians paid an estimated $3.4 billion in credit card interest last year, but if average interest had dropped to just 10 per cent, the bill could have been almost halved.
“On an individual basis, if you owe around $4,000 and lower the average interest rate to 10 percent, you can save almost $350 a year in interest.
“Come to think of it, this money could add up to a significant amount of your debt.”
Even if you don’t have money on your credit card, fees can end up in your back pocket, Ms. Tindall said.
“There is a difference between the highest fee and the lowest fee as big as Mount Kosciusko — the highest fee is $1,200 — which is the amount some people pay their card providers every year just to have the card,” he said.
“There are eleven providers offering credit cards with $0 ongoing fees, three of which even offer rewards, so if you shop you can have your cake and eat it too.”
Canstar found that interest rates ranged from 28.49 per cent to 8.99 per cent, with five providers offering credit cards for less than 10 per cent.
Ms Tindall said people should keep a daily health check of their card every 12 months, no matter what credit card they have.
“Check your rate, your fee, and really calculate the value of your rewards. If your points aren’t worth more than your interest and fees, the card is costing you money and it’s probably time to dump it.”
