Switching credit cards: Should I change credit cards?

13 October 2016
Been thinking about changing credit cards? Not sure where to start? Ask Canstar.

Switching credit cards offers a way to get out of debt faster. Read the questions below – and if you answer “yes” to any of these questions, this is a great indication that you should be shopping around for a better deal.

Do you owe a running balance?

If so you’re not alone; there is currently around $31.4 billion worth of credit card interest debt (ASIC Debt Clock). At an average interest rate of 16.8% p.a., that equates to around $14.4 million in credit card interest per day! So it is vital that you make sure you are paying as little interest as possible if you owe a running balance and do not pay your card off in full every month.

Does your credit card charge an interest rate of more than 10%?

Your credit card interest rate can make a huge difference to how much you pay on your credit card debt. It goes without saying that that the less interest you pay, the quicker you are likely to get on top of ongoing debt.

Currently on Canstar’s database, the lowest rate on our database is 7.99% p.a., but credit card interest rates can reach up to a maximum of 23.50% p.a.. That’s a huge variation and can have an equally huge impact on the amount of interest you pay.

As for the range of rates on offer, this is what our database currently shows:

Purchase Rate (p.a.)
Card Type Minimum Average Maximum
Standard 7.99% 15.28% 23.50%
Gold 11.80% 17.97% 20.74%
Platinum 9.99% 18.97% 20.99%
All cards 7.99% 16.77% 23.50%
Source: CANSTAR. Rates as at 4 October 2016.

Did you sign up for your credit card because of the rewards on offer?

Rewards credit cards tend to charge a higher rate of interest than basic cards. If you owe money, check whether the interest you’re paying is worth more than the rewards. While rewards can be great, they come at the cost of higher interest rates and usually a higher annual fee as well.

Check out our guide on types of credit cards to find out what card is suitable for you.

Did you originally sign up for a 0% honeymoon rate?

Balance transfer credit cards with introductory rates, or honeymoon rates, allow you to have a lower interest rate for a fixed period of time, before returning to a higher interest rate once the introductory period has finished.

Introductory rates are close to or at 0%, which can be good if you’re using them to pay off your debt – but be aware that the revert rate (the rate that applies after the introductory period) tends to be higher than average – as high as 20.99%! (Current as of October 2016.) You can find out more about revert rates here.

Some balance transfer cards waive the annual fee for the first 12 months. After that, the annual fee will be charged, and it can be anywhere from $0 to $99 on current balance transfer offers.

Did you apply for your credit card because you liked the colour?

Over the past few years Canstar has seen a move upwards from the standard, gold and platinum levels of card to standard, diamond, gold, platinum, signature, and/or black card. With that extra level above platinum that wasn’t there before, it’s important to be aware that different colours of card indicate different annual fees and credit card limits, even those customised/personalised credit cards where you can put a photo of your dog on your credit card.

Many Australians like to be “upwardly mobile” – but it generally comes at a cost. It might be worth weighing up the snob appeal with the cost…

Switching credit cards: Compare your options first

Canstar analyse and rate 190 credit cards from 65 providers across four different spending profiles: check out what is on offer and whether you could be saving money.

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.

Learn more about Credit Cards

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