Be aware of rising average Credit Card Interest Rates

With Labor calling for a senate inquiry into credit card interest rates it’s perhaps worth pointing out that when it comes to choosing the right credit card, it is a case of ‘buyer be aware’.

Average credit card interest rates have been high for many years, this isn’t a new development. Here at CANSTAR, we research and rate almost 200 credit cards from providers across Australia and the average credit card interest rate has not been lower than 14.5% since 2007.

Understand the Specifics of Your Credit Card

Currently the average credit card interest rate on our database is just over 17% – but this masks a significant difference between the highest and lowest interest rates on the market. That’s why it really is a case of buyer be aware of what you’re applying for; consumers need to take the initiative to check what rate of interest they’re paying and, if they owe a debt, make sure they’re on a lower-rate card. The bottom line is that most financial institutions offer both lower rate credit cards for those who carry a debt and want to minimize their interest costs and higher-rate cards with rewards programs attached for those who spend up big but don’t carry a debt.

Currently on our database, the highest, lowest and average credit card interest rates are as follows:

Low Rate Personal Credit Cards
  Min Max Average
Purchase 8.99% 15.95% 12.51%
Cash Advance 8.99% 21.99% 17.09%
Balance Transfer 0.00% 8.58% 2.12%
Fee Nil  $99.00  $48.60

 

Standard Rate Personal Credit Cards
Min Max Average
Purchase 11.49% 23.50% 19.26%
Cash Advance 11.49% 29.49% 20.64%
Balance Transfer 0.00% 9.99% 1.53%
Fee Nil  $450.00  $100.18

Source: Canstar. Cards rated by Canstar.

Typically a low rate card is a no-frills card without the rewards programs and other bonuses and perks. A standard card typically has a rewards program attached and other features and benefits. And let’s be honest, we’re all suckers for a good reward!  If you’re not disciplined about your spending though and you’re going to carry a debt, the interest rate attached to most rewards programs is probably not going to be for you. It would be better off sticking to a low rate card where you debts can be controlled at a lower level than a standard card.

To find out what card is right for you, check out our credit card ratings and find the card that’s right for you.

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