Australia’s love-hate relationship with credit cards
- creditcardfinder.com.au launches first Insights Report revealing love-hate relationship
- Emerging market of credit card online shoppers
- Rewards cards almost 4 times more popular than 2 years ago
- Low purchase rate top priority for more cardholders but might not be best value!
JUNE 9, 2014 - Australia's biggest credit card comparison website creditcardfinder.com.au has uncovered the nation’s intriguing love-hate relationship with credit cards, following the release of its first Credit Card Insights Report – Winter 2014.
Released on Monday June 9, 2014, it was compiled by creditcardfinder.com.au, which analysed application data from the site, as well as a survey of more than 1,200 respondents commissioned by the website and conducted by leading global research group pureprofile.
The report found that while the majority (77 percent) of cardholders hated something about their credit cards, most (74 percent) have kept the same card for at least the past five years.
This was despite only 6 percent of cardholders in the survey who hated everything about their cards but can’t let go of them.
The most common dislike was high interest rates (42%), which was equally despised by both men and women. The second biggest grievance was high annual fees (36%), while cash advance fees and international fees were equal third.
Michelle Hutchison, Money Expert at creditcardfinder.com.au, said cardholders need to improve their relationships with their credit cards.
“One of the most interesting findings from our report was that so many cardholders are unhappy about at least one part of their cards, yet they don’t do anything about it. There was almost one in four cardholders who were truly happy with their credit cards.
“Almost one in three cardholders are clearly lazy about their credit card habits, admitting that they either can’t be bothered to change, don’t have time or don’t know where to start.
“The majority of cardholders who aren’t happy with their cards, stayed because they liked their provider.
“It shows that most cardholders can improve their relationship with their credit cards by reviewing what type of card user they are and comparing what’s available. They will be much happier and will probably save money in the process."
The report also identified four distinct credit card user types:
- Emergency cardholders: Two in five cardholders (42 percent) applied for their card for emergency purposes. These cardholders are more likely to own the one card and be women, with half of the female respondents keeping a card for emergencies compared to one in three men. Cardholders in Tasmania were also more likely to apply for cards for emergency purposes than any other state.
- Online shoppers: With over one in 10 cardholders now applying for credit cards specifically for online shopping, this is the space to watch, as credit card providers are likely to introduce new credit cards targeting this market. Online shopping is a growing part of the retail landscape, with the latest Australian Bureau of Statistics data showing $520 million was spent by Australians online in April alone.
- Reward hunters: Credit cards for reward customers is rising in popularity, as one in five cardholders applied for cards with rewards points – almost four times more than two years ago. These cardholders use their cards for everyday spending, paying bills and for holidays.
- Proactive cardholders: While this is a small group of cardholders (2.3 percent), it equates to an estimated 900 credit card accounts opened every month for balance transfers (based on Reserve Bank of Australia data of the past 12 months). This group is also expected to rise, with more cardholders working harder to pay down their debts, coupled with more credit card providers competing harder for balance transfer offers.
Credit card applications through creditcardfinder.com.au:
With one in every 10 credit card applications opened in Australia through creditcardfinder.com.au each month, the report showed a high demand for Australians shopping for credit cards with a low purchase rate. In fact, the majority (62 percent) applied for a low rate credit card – with a purchase rate of less than 14 percent.
The second most popular credit card type was high end cards: rewards cards and gold or platinum credit cards. The least popular cards were no or low annual fee credit cards, with just 16 percent of applications were for this card type.
“It’s interesting to see that the low fee cards were so unpopular, as our research shows more than two in every five cardholders surveyed (42 percent), applied for a card for emergency purposes and low fee cards are best suited to these users,” said Mrs Hutchison.
“It’s also concerning to see that the most popular cards were based on their low purchase rate, which may not be the best value for all of these cardholders. Low rate cards are great for those who know they won’t always pay off their balance in full each month, but if it’s only for emergencies or you always pay off your balance, then you could be paying too much in annual fees as the annual fee tends to counterbalance the lower rate.
“The findings also show that many cardholders are lured by incentives like rewards programs, which is concerning as these cards are generally more expensive and require a spend of at least $14,000 per year to benefit (unless you choose one with no annual fee, however these cards are generally less value).
“Cardholders need to stop hoping that their credit cards are the right choice for them or putting up with a card that doesn't suit them. Spending habits change and the type of card that suits you may be different every couple of years so it’s important to regularly review your situation and make sure your card is worth the cost.”
More stats from the creditcardfinder.com.au Insights Report:
Men vs women
- More savvy: 70% applied for a low rate card compared to 63% of men
- More loyal: 76% sticking with the same card for 5 years or longer vs 71% of men
- Online shoppers: more likely to apply for a credit card for online shopping
- More likely to apply for cards for emergencies
- Happier with their credit cards than men
- More likely to choose a high end card
- Multiple cards: more likely to have more than 1
- Fraud: 38% of men experienced fraud as opposed to 33% or women.
- Baby boomers aged 55+ were most responsible cardholders, most likely to pay their cards off in full each month and preferred no fee cards more than other generations. But they are also most loyal customers, with 79% keeping the same card for over 5 years
- Many Gen Y, the youngest adult age group of 18-34 year-olds, were more likely to be reckless with their credit card choices, applying for rewards or high end credit cards which they are unlikely to benefit from. They were 3 times more likely than baby boomers to believe their card level was a status symbol. Gen Y were also a lot more secretive than other generations, with 1 in 10 keeping some of their purchases from their partners.
- Gen X is the laziest group: highest number of cardholders who can’t be bothered switching cards to find the one that suits them.
State by state:
- Northern Territory: The biggest reward point hunters with 50% applying for cards to earn points through creditcardfinder.com.au – the highest than any other state
- Western Australia: More likely to have two or more cards than any other state, also happiest bunch of cardholders
- South Australia: More likely to take out a card for a holiday and also the most trustworthy, preferring to keep their accounts with the one bank because they trust their provider
- Tasmania: Most loyal, 9 out of 10 prefer to keep their products with the same bank and safest with more likely to apply for a card for emergency purposes. They are also the least interested in reward points
- Queensland: Least loyal, with 1 in 3 keeping their credit cards and other banking products with separate providers, prefer low rate cards, and most likely to have just 1 card
- New South Wales: More likely to apply for a balance transfer card, almost 1 in 5 switched at least once which is more than any other state
- Australian Capital Territory: Reward cards were most popular reason to apply for a credit card than any other state, least interested in low rate cards
For further information
The information in this release is accurate as of the date published, but rates, fees and other product features may have changed. Please see updated product information on finder.com.au's review pages for the current correct values.
More than 3 million Australians turn to finder.com.au every month to save money, time and make important life choices. We compare virtually everything from credit cards, phone plans, health insurance, travel deals and much more.
Our free service is 100% independently-owned by two Australians: Fred Schebesta and Frank Restuccia. Since launching in 2006, we’ve helped our users make more than 17 million decisions.
We continue to expand and launch around the globe, and now operate in the United States and United Kingdom. For further information visit www.finder.com.au.