Plodding plastic: Australians paying $1.1 billion credit card loyalty tax
Complacency when it comes to credit cards is hurting the hip pocket of millions of Aussies, according to new research by Finder.
Finder analysis shows the average credit card holder could be saving $100 per year by switching their credit card – that's a whopping $1.1 billion nationwide.
Over 11 million Australians have a credit card, with the average having a 14.70% interest rate on their current card, according to Finder's Consumer Sentiment Tracker.
Aussies also have an average balance of $1,392 accruing interest, according to the latest RBA figures.
Switching to a lower rate of 7.49% could save the average Aussie $100 per year.
Amy Bradney-George, credit card expert at Finder, said plenty of Aussies could save on their credit card by making a simple switch.
"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% for purchases.
"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. But if you don't shop around after getting a card, you won't know how much value you could get elsewhere."
Bradney-George said credit cards can be super convenient as long as they are used responsibly.
"Having a credit card can give you access to some great perks, including rewards and interest-free offers or even travel insurance. But if you don't pay them off quickly, they can quickly snowball into debt.
"That's why it's so important to get one that you can afford to pay off each month."
To help Australians make better financial decisions while still enjoying their online shopping fix or travel rewards fix, Finder has today announced the winners of its Credit Card Awards 2023.
Using 12 months' worth of data, Finder's experts have analysed the rates, fees and offer details for every personal and business credit card in Finder's database – that's over 290 cards.
Bradney-George said there are hundreds of credit cards on the market in Australia, which can be overwhelming when you don't want to spend a lot of time searching for a new card.
"The Finder Credit Card Awards give people a point of reference to help them find a card that offers them value.
"The award winners all offer value within their categories, whether it's about saving money on rates and fees, taking a card with you when you travel overseas or earning points you can use to pay for travel and other rewards."
NAB's Low Rate Credit Card took out the top gong for Best Balance Transfer Credit Card.
"The balance transfer category is for people who want to pay off existing card debt interest-free," Bradney-George said.
"With $18.6 billion of credit card debt accruing interest in Australia, a balance transfer could give people breathing space to pay off their actual debt without interest charges for an introductory period – which could be up to 3 years long."
Bankwest's Zero Platinum Mastercard took the top spot for Best Travel Credit Card, while American Express' Low Rate Credit Card won 2 categories – Best Low Rate Credit Card and Best No Annual Fee Credit Card.
For Aussies looking to get their frequent flyer fix, ANZ's Frequent Flyer Black won Best Frequent Flyer Credit Card - Qantas, while American Express' Velocity Platinum Card scored Best Frequent Flyer Credit Card - Velocity.
For those looking to score bonus reward points, the Bankwest More World Mastercard won Best Rewards Credit Card while the American Express Essential Credit Card won Best No Annual Fee Rewards Credit Card.
Bradney-George said the highly commended cards in each category also stood out for the features and offers they provided during the 12-month period analysed.
Learn more about the Finder Credit Card Awards 2023 here.
