Credit where credit’s due: Latest 5-Star credit cards revealed

If you use a credit card already or are thinking of getting one in particular, you may want to check the results of our newest credit card Star Ratings to see how much value it’s offering.

With budgets tighter than usual for many of us at the moment, some households are looking for ways to cut back on costs. This may involve using your credit card a bit less, but have you thought about how much your credit card is costing you directly in interest, fees and other costs, and what you’re getting in return?

Whether you’ve got a no-frills low-rate credit card or a high-end premium card, you may be curious to know how much value it’s offering relative to other, similar cards. To help you tap your plastic with confidence that you’re getting value from it, Canstar Research has rated 195 credit cards on our database, comparing them on costs and features. It identified 58 cards that offered Outstanding Value in various categories.

What goes into a 5-Star credit card?

Every six months, Canstar Research assesses the credit cards on our database, looking at both price and features to determine which products offer 5-Star value. Some of the product aspects taken into account include:

  • Fees including annual fees, late payment fees, dishonour fees
  • Interest rates including purchase rate and cash advance rate, as well as any applicable currency exchange rates
  • Number of interest-free days offered on purchases
  • Standard features such as purchase protection insurance and online card management
  • Premium features such as additional complimentary insurance and concierge services (where applicable)
  • Any applicable loyalty or rewards programs such as frequent flyer schemes

Cards are assessed against one the following customer profiles, and some are rated in multiple profiles. All profiles use a weighting of 70% price and 30% features to score products, except for Premium which uses a weighting of 40% price and 60% features.

  • Low rate – for those who want a low rate and flexible repayment conditions
  • Low fee – for those after a low ongoing fee and potential access to some premium features
  • Premium – for consumers wanting a card that offers more benefits and frills than a more basic credit card would, such as access to a concierge service or complimentary travel insurance
  • Rewards – for those who want to earn a return on their everyday spending, in the form of cash-back, gift cards or lifestyle rewards, for example
  • Frequent flyer – suitable for those who want to be able to redeem card points for flights

Rewards and frequent flyer cards are assessed against annual spend amounts of $12k, $24k, $36k, $60k, and $120k, and premium cards are assessed against annual spend amounts of $24k, $60k, and $120k. Low rate and low fee cards, on the other hand, are each assessed based on a single annual spend amount of $12k and $6k, respectively.

Canstar Research found that when this year’s 5-Star Rated credit cards were compared against the market average:

  • 5-Star low rate cards had an average interest rate of 9.43%, versus the market average interest rate of 16.04%
  • 5-Star low fee cards had an average annual fee of $0, versus the market average annual fee of $85.69

You can visit our credit card comparison tables to view the products that received a 5-Star Rating in each consumer profile.

For more information on our credit card Star Ratings and how they were calculated, view the results and methodology documents.

If you’re currently comparing credit cards, the comparison table below displays some of the low interest credit cards currently available on Canstar’s database for Australians looking to spend around $2,000 per month. Please note that this table features links direct to the provider’s website, and is sorted by Star Rating (highest to lowest), followed by provider name (alphabetical). Use Canstar’s credit card comparison selector to view a wider range of credit cards.

Please note that as of 20 July 2020, Virgin has announced that Velocity Frequent Flyer members can once again redeem points for certain domestic flights and hotels. From 31 July 2020, points can also be redeemed to book car hire with Europcar. Some redemptions are still currently unavailable. Please check with your credit card provider directly for details before making any decision relating to your card or points.

 

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