How are you feeling about your credit card interest rate?
What’s your credit card interest rate? Are you really getting bang for your buck, and using a line of credit that is genuinely convenient? It’s important that you are, because you could accrue unnecessary debt (and a lot of it) by having the wrong sort of credit card.
According to research from Finder, reported in late March, 79 per cent of Australians, or 14.3 million people, feel “cheated” by their credit card providers because of high interest rates. More men believe credit card interest rates should be lower (59 per cent), while only 54 per cent of women feel the same.
Why do people feel cheated by their credit card providers?
One of the reasons these 14.3 million people gave for feeling cheated by their banks was that interest rates do not move in line with the official cash rate from the Reserve Bank of Australia (RBA). In October 2011, the cash rate was 4.75 per cent. Since then, it has fallen to a record-low 1.5 per cent, and mortgage interest rates have shifted accordingly. Credit card interest rates, on the other hand, have moved in the opposite direction, from 19.70 per cent to 19.75 per cent.
“Consumers tend to think the announcement of a rate cut means their personal finances will benefit, but if we look back over the past five years, this hasn’t translated into savings for credit card holders,” said Finder Money Expert Bessie Hassan.
“It’s a shock to households to be forking out so much interest despite the cash rate taking a downward spiral. Almost one in 10 credit card holders are considering getting rid of their credit card because of the stubbornly high interest rates.”
What’s forcing people to change their tune?
More women are turning away from the plastic because of high interest rates compared to men (16 per cent and 11 per cent respectively). Credit cards offer unparalleled convenience, so we shouldn’t necessarily be turning our backs on them completely. How do the 21 per cent of people who are happy with their interest rates manage?
It might be that these people have appropriate credit card interest rates for their needs. To talk more about what that might look like for you, get in touch with Beyond Bank today.