With almost $50 billion currently owed on credit cards – and almost $35 billion of that accruing interest – Aussies have a love affair with the ‘plastic fantastic’. It’s an expensive passion though, with CANSTAR calculating that Australians have collectively paid more than $24 billion in credit card interest over the past four years – an amount that, if it were redirected to the Federal Government, would negate the short-term need for a Medicare co-payment, deficit tax, a freeze in foreign aid funding and freeze of Family Tax Benefits.
Notwithstanding the low interest rate environment and our improved personal saving profile, our analysis of official statistics reveal that Australians have paid between $14 billion at a minimum and $32 billion as a maximum in credit card interest charges over the past four years. Based on the average credit card interest rate each month across all providers, the average amount of credit card interest paid over the past five years is approximately $24.2 billion. That currently equates to $500 million per month. Ouch!
|Interest Rates (Per CANSTAR’s Database)|
|Highest interest rate||23.50%|
|Lowest interest rate||8.99%|
|Average interest rate||17.03%|
Of course, we?re not saying that consumers SHOULD be giving that extra money to the government at all, but simply putting the amount of credit card interest that we all pay into perspective. Credit cards can be fantastic cashflow tools, but only if you use them wisely.
|Federal Budget savings initiative 2014||Total saving over 4 years|
|Deficit levy||$3.1 billion|
|Fuel excise reintroduction||$2.2 billion|
|Foreign aid freeze||$6.4 billion|
|Medicare co-payment||$3.5 billion|
|Family tax benefit payments freeze||$2.6 billion|
|Total Saving||$17.8 billion|
|Average credit card interest||$24.2 billion|
Who offers outstanding value?
There is no shortage of credit cards vying for your business. To help you compare the products available, CANSTAR has looked at 190 credit cards across 65 lenders, assessing the value for each category of spender. We have found:
- 18 credit cards that offer outstanding value for big spenders
- 18 credit cards that offer outstanding value for everyday spenders
- 13 credit cards that offer outstanding value for occasional spenders
- 18 credit cards that offer outstanding value for habitual spenders
CANSTAR?s Credit Card Star Ratings is an invaluable starting point when creating a shopping list of credit cards that match your spending profile. View the complete Credit Card Star Ratings report.