Half of Australians unaware of their credit card rates
It may seem unthinkable, following several years of austerity in the aftermath of the global financial crisis, but still around HALF of Australians remain unaware of the interest rates they are paying when they use their credit card.
Consumer group Choice said that financial institutions were profiting from confusing credit card deals that often left consumers baffled about the rates they were paying to service their debts.
The nation’s 15.4 million credit cards carry a combined balance of $36 billion, according to the Reserve Bank.
And once temporary 0% deals are accounted for, the average credit card interest rate stands at 17.16%, said Choice chief executive Alan Kirkland. This means banks are raking in over $6 billion every year in interest revenue.
The survey by the consumer group found that the gap between the Reserve Bank’s cash rate and the average credit card rate had widened since 2011, and that consumers could have saved over $80 per year if average rates had towed the line with the central cash rate since the series of reductions over the past 18 months.
The group said that institutions were able to nudge up their margins on credit cards because consumers were focussed much more upon their home loan rates.
“The consumer psychology around credit cards is very different to home loans, where we see so much focus on interest rate movements, and a huge amount of public pressure,” Mr Kirkland said.
This was disappointing, he added, because it meant that many overlooked the low-fee and 0% options in the credit card market.
Why not check out what’s available today at Which4U’s credit card tables?
If you enjoyed this article, check out the latest articles on our Finance Blog.
by Gemma Maddock