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Be aware of rising average Credit Card Interest Rates
23 June 2015
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.
