Figures released last week by the Reserve Bank of Australia show that consumers collectively wiped a massive $6.34 billion off their debt-accruing personal credit card balances from March 2020 to the end of August, as coronavirus restrictions have impacted spending. But the nation’s total debt-bearing personal credit card balance still stands at around $20.6 billion or $1,581 on average per account, and according to Canstar data, some consumers could be paying considerably more in fees and interest than they would with a 5-Star Rated card.
What difference could a 5-Star Rated credit card make?
Canstar’s analysis shows there is a significant difference in the average interest rates and fees charged by low rate and low fee cards on the database, compared to those found to offer 5-Star value.
| Card type | Purchase rate | Annual fee | ||
|---|---|---|---|---|
| 5-Star average | Database average | 5-Star average | Database average | |
| Low rate | 9.65% | 16.44% | $44 | $90 |
| Low fee | 11.71% | 16.34% | $0 | $90 |
For cards that allow customers to earn points or offer rewards, 5-Star Rated products also offer customers more bang for their buck on average, according to Canstar Research.
| Card type | Reward return^ | |
|---|---|---|
| 5-Star average | Database average | |
| Rewards | $687.79 | $387.90 |
| Frequent Flyer | $1,288.41 | $705.53 |
| Premium | $404.89 | $390.41 |
Source: www.canstar.com.au – 12/10/2020. Based on credit cards rated in Canstar’s Credit Card Star Ratings (October 2020). Rewards, Premium and Frequent Flyer profile figures above are based on a $60,000 annual spend level. ^Reward Return is calculated based on the dollar value of rewards earned over 12 months. Please see the Canstar Credit Card Star Ratings methodology for more information on how Reward Return is calculated for each profile. Premium Reward Return is calculated by taking the best yearly dollar return from either frequent flyer rewards or general rewards, and only considers cards with a rewards program.
How were credit cards assessed?
As part of its latest six-monthly Credit Card Star Ratings, Canstar Research assessed 167 products based on their price and the features they offer. Cards were split into five main categories, or consumer profiles.
- Low rate – for consumers who want a low rate and flexible repayment conditions
- Low fee – for those looking for a low ongoing fee and potential access to some premium features
- Premium – for consumers who want 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. Due to international travel restrictions, only domestic redemption of points was taken into account for these Ratings.
Rewards and frequent flyer cards were assessed against annual spend amounts of $12k, $24k, $36k, $60k and $120k, and premium cards against annual spend amounts of $24k, $60k and $120k. Low rate and low fee cards, on the other hand, were each assessed based on a single annual spend amount of $12k and $6k, respectively.
Canstar Research has its own way of comparing credit cards for each consumer profile. The Star Ratings calculations for each profile are based on how consumers typically use that type of card, taking into account a range of variable factors that together determine the value a card delivers.
These factors include:
- Fees, including annual fees, late payment fees and dishonour fees
- Interest rates, including purchase rates and cash advance rates, 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)
- Loyalty or rewards programs such as frequent flyer schemes.
5-Star Rated credit cards
In total, 53 credit cards received a 5-Star Rating. See below a list of these outstanding value credit cards in each profile (sorted by provider name alphabetically). To see how each card on Canstar’s database was rated based on various profiles, visit the credit card comparison tables.
5-Star Rated low rate credit cards
| American Express | Low Rate Credit Card |
| Auswide Bank | Low Rate Visa |
| Bank First | Visa Platinum Credit Card |
| Bank of us | Visa Credit Card |
| Bendigo Bank | Low Rate First Mastercard (for<25) |
| Bendigo Bank | Low Rate Mastercard |
| Community First CU | Low Rate Blue Credit Card |
| Community First CU | Low Rate Credit Card |
| Community First CU | Low Rate Pink Credit Card |
| Endeavour Mutual Bank | Visa Credit Card |
| G&C Mutual Bank | Low Rate Visa Credit Card |
| Latitude Financial Services | Low Rate Mastercard |
| MOVE Bank | Low Rate Credit Card |
| Sydney Mutual Bank | Visa Credit Card |
5-Star Rated low fee credit cards
| American Express | Low Rate Credit Card |
| Bank First | Visa Classic Credit Card |
| BankVic | Visa Silver |
| Heritage Bank | Gold Low Rate |
| Horizon Bank | Visa Credit Card |
| Hume Bank | Value |
| ING | Orange One Low Rate |
| ME | Frank Credit Card |
| QBANK | Bluey Card |
| Qudos Bank | Lifestyle |
| Teachers Mutual Bank | Credit Card |
| UniBank | Credit Card |
5-Star Rated premium credit cards
These premium cards were awarded a 5-Star Rating based on a $24k annual spend amount.
| ANZ | Rewards Platinum |
| Bankwest | More Platinum Mastercard |
| Bendigo Bank | Platinum Rewards Mastercard |
| HSBC | Platinum Credit Card |
These premium cards were awarded a 5-Star Rating based on a $60k annual spend amount.
| ANZ | Rewards Platinum |
| Bankwest | More Platinum Mastercard |
| Bendigo Bank | Platinum Rewards Mastercard |
| Commonwealth Bank | Ultimate Awards – Rewards Option |
| HSBC | Platinum Credit Card |
| NAB | Rewards Platinum Card |
These premium cards were awarded a 5-Star Rating based on a $120k annual spend amount.
| ANZ | Rewards Platinum |
| Bank of Melbourne | Amplify Platinum – Rewards Option |
| BankSA | Amplify Platinum – Rewards Option |
| Bankwest | More World Mastercard |
| Bendigo Bank | Platinum Rewards Mastercard |
| Commonwealth Bank | Ultimate Awards – Rewards Option |
| HSBC | Platinum Credit Card |
| St.George Bank | Amplify Platinum – Rewards Option |
| Westpac | Altitude Platinum – Rewards Option |
5-Star Rated rewards credit cards
These rewards cards were awarded a 5-Star Rating based on a $12k annual spend amount.
| American Express | David Jones Card – Rewards Option |
| American Express | Essential Credit Card |
| HSBC | Platinum Credit Card |
| Latitude Financial Services | Infinity Rewards Visa |
These rewards cards were awarded a 5-Star Rating based on a $24k annual spend amount.
| American Express | David Jones Card – Rewards Option |
| Latitude Financial Services | Infinity Rewards Visa |
| Summerland Credit Union | Rewards Card |
These rewards cards were awarded a 5-Star Rating based on a $36k annual spend amount.
| American Express | David Jones Card – Rewards Option |
| Commonwealth Bank | Ultimate Awards – Rewards Option |
| Latitude Financial Services | Infinity Rewards Visa |
| Summerland Credit Union | Rewards Card |
These rewards cards were awarded a 5-Star Rating based on a $60k annual spend amount.
| American Express | David Jones Card – Rewards Option |
| American Express | David Jones Platinum Card – Rewards |
| Bankwest | More Platinum Mastercard |
| Commonwealth Bank | Ultimate Awards – Rewards Option |
| Summerland Credit Union | Rewards Card |
These rewards cards were awarded a 5-Star Rating based on a $120k annual spend amount.
| American Express | David Jones Card – Rewards Option |
| American Express | David Jones Platinum Card – Rewards |
| Bankwest | More Platinum Mastercard |
| Bankwest | More World Mastercard |
| Coles | Rewards Mastercard |
| Commonwealth Bank | Ultimate Awards – Rewards Option |
5-Star Rated frequent flyer credit cards
These frequent flyer cards were awarded a 5-Star Rating based on a $12k annual spend amount.
| American Express | Essential Credit Card |
| American Express | Explorer Credit Card |
| American Express | Platinum Edge Credit Card |
| American Express | Qantas Discovery Card |
| American Express | Velocity Escape Card |
| American Express | Velocity Platinum Card |
| HSBC | Platinum Credit Card |
These frequent flyer cards were awarded a 5-Star Rating based on a $24k annual spend amount.
| American Express | David Jones Card – Qantas Option |
| American Express | David Jones Platinum Card – Qantas |
| American Express | Explorer Credit Card |
| American Express | Platinum Edge Credit Card |
| American Express | Velocity Platinum Card |
These frequent flyer cards were awarded a 5-Star Rating based on a $36k annual spend amount.
| American Express | David Jones Card – Qantas Option |
| American Express | David Jones Platinum Card – Qantas |
| American Express | Explorer Credit Card |
| American Express | Platinum Edge Credit Card |
| American Express | Qantas Ultimate Card |
| American Express | Velocity Platinum Card |
| Commonwealth Bank | Ultimate Awards – Rewards Option |
| Commonwealth Bank | Ultimate Awards – Qantas Option |
These frequent flyer cards were awarded a 5-Star Rating based on a $60k annual spend amount.
| American Express | David Jones Platinum Card – Qantas |
| American Express | David Jones Card – Qantas Option |
| American Express | Qantas Ultimate Card |
| American Express | Explorer Credit Card |
| American Express | Platinum Edge Credit Card |
| American Express | Velocity Platinum Card |
| Commonwealth Bank | Ultimate Awards – Rewards Option |
| Commonwealth Bank | Ultimate Awards – Qantas Option |
| Diners Club Australia | Personal Dual Card |
These frequent flyer cards were awarded a 5-Star Rating based on a $120k annual spend amount.
| American Express | David Jones Platinum Card – Qantas |
| American Express | David Jones Card – Qantas Option |
| American Express | Qantas Ultimate Card |
| American Express | Explorer Credit Card |
| American Express | David Jones Platinum Card – Rewards |
| American Express | Velocity Platinum Card |
| Commonwealth Bank | Ultimate Awards – Rewards Option |
| Commonwealth Bank | Ultimate Awards – Qantas Option |
| Diners Club Australia | Personal Dual Card |
For more information about how Canstar’s Credit Card Star Ratings are determined, take a look at the methodology and report.
This article was reviewed by our Sub Editor Tom Letts before it was published, as part of our fact-checking process.
Main image source: Konstantin Kolosov (Shutterstock).
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