According to a new CHOICE survey, around half of Australians who reported using their credit card recently say they do not know the interest rate that would apply. Are consumers just dim, or are banks purposely making their products confusing?
Credit cards picture from Shutterstock
As part of a representative survey into national spending habits, CHOICE asked 1045 Australians if they knew the interest rate that currently applied to new purchases on their credit card. 48% responded that the were unsure or didn’t know. The consumer group argues that its survey confirms that credit cards are deliberately confusing products, designed to distract consumers from very high interest rates.
“The gap between the Reserve Bank’s cash rate and the average credit card interest rate has widened by 176 basis points since June 2011, earning the banks an additional $630 million this year alone,” CHOICE said in a statement.
The average credit card interest rate in Australia is 17.16 percent, with the nation’s credit card debt adding up to over $36 billion.
“Credit cards are marketed as a convenient payment option, often with a modest annual fee, honeymoon interest rate periods and seemingly lucrative rewards programs,” CHOICE CEO Alan Kirkland said. “But the real rewards program here is for our banks, who earn an estimated $6.2 billion in revenue from average credit card interest rates.”
Kirkland said that anyone who does not pay off their balance in full every month should check their credit card interest rate and shop around for a low-rate, low-fee card. Click here for our recent overview of best credit card and bank deals from the past month.
See also: Australians Are Still Being Rorted By Credit Card Surcharge Fees
Comments
7 responses to “Do You Know Your Credit Card Interest Rate?”
I wouldn’t have a clue – I pay off my credit card in full every month without fail so I don’t need to know.
This. I’ve had a credit card since I started uni (10 years ago) and not once have I paid a cent of interest. My interest rate could be 200% for all I care.
Yep, don’t have an interest rate to worry about, it’s prepaid with no fees and charges. My employer pays the fees for me. Win!
0%. Having no credit card is the best.
Yep, who cares what the interest rate is. If you’re not paying it off in full every month you’re doing it wrong.
Paying my card out and switching to a Visa Debit is one of the best desicions that I have made. No money left on the card = no overspending.
A bit of perspective from someone who actually does have credit card debt and does pay interest – how hard is it to understand? Mine is 13.49% purchases and 21.xx% cash (hardly ever use the cash advance facility so not as sure). I know this because I spend 60 seconds reading my bill a month… Not exactly rocket science?