In our most recent star ratings research, Canstar researched and rated 213 credit cards available in Australia. We’ve scoured the market to find the best rates and features on offer as of October 2016 for Low Rate and Low Fee credit cards.
Who needs a Low Rate credit card?
You might be in need of a low rate credit card if your spending habits are similar to this Canstar consumer profile:
- Your credit card is used for much of your everyday spending, or you regular make large purchases on it.
- You more often than not don’t repay the full closing balance on your statement.
- You sometimes only make the minimum monthly repayments.
Benefits of a Low Rate credit card
- If you do end up paying interest on your purchases, you’ll pay less due to the lower rate.
- Some Low Rate cards also have a low annual fee or no annual fee.
Drawbacks of a Low Rate credit card
- It’s usually hard to find a Low Rate card that offers a rewards program or any similar perks.
- Some supposedly “low rate” cards have an interest rate that is still quite high, and the card may come with high annual fees as an additional cost.
Who needs a Low Fee credit card?
Do you only use your credit card for the occasional large purchase or for shopping online? Do rewards schemes and frequent flyer points not particularly interest you? You may fit Canstar’s Low Fee credit card profile if:
- You generally pay the balance in full each month, only occasionally taking more than one month to pay off a large purchase.
- Your credit card sits unused much of the time so you don’t want large ongoing fees.
- You might benefit from free extended warranty insurance that comes on some low cost premium cards.
Benefits of a Low Fee credit card
- Low Fee cards charge a low annual fee or no annual fee, which can save you money.
- Because they’re (usually) a no frills option, Low Fee cards are good if you need to access credit occasionally or in case of financial emergencies.
- A few Low Fee cards come with the perks you’d associate with a full-fee card, such as complimentary travel insurance and a rewards program.
Drawbacks of a Low Fee card
- Many Low Fee cards compensate for the lower annual fee by having higher interest rates attached.
- Low Fee cards are generally a no frills option, so if you’re after a rewards program, these cards probably aren’t for you.
- The low annual fee doesn’t always stay that low. Some Low Fee cards have a promotional period for their low fee, and revert to being a full-fee card after the promotional period ends. Always read the PDS and key facts sheet before buying a credit card.
What’s new with Low Rate and Low Fee cards?
This year, we have seen the rise of rewards program offerings on low rate credit cards. But be warned – if you don’t pay your outstanding credit card balance in full, these rewards may not give fantastic value for money.
For example if you had a rewards credit card that provided a return on spending of 1.5%, but were revolving a debt of $5000 at an interest rate of 10% p.a., you would have to spend around $2,700 per month for the rewards you received to equal the interest that you were charged – assuming you weren’t adding to the debt each month.
At an interest rate of 20% p.a. your monthly spending would need to be over $5400 per month to equal the interest being charged on the outstanding balance.
What rates are on offer for credit cards?
The following interest rates are available for personal, non-rewards credit cards on the Canstar database:
|Rate Type||Interest Rate||Annual Fee|
Source: CANSTAR. Rates current as at 27 March 2017.
If you’re in the market for a Low Fee or Low Rate credit card, start your search using Canstar’s online credit card comparison pages: