Australian Credit Card Users Sucked In By Free Offers

Common sense dictates that the most important feature of a credit card is the interest rate charged, but it seems we're all too willing to be sucked in by a free 'extra' thrown in with the card.

A survey of 2,351 users by online comparison site CreditCardFinder found that 30% would be tempted to sign up for a card based on the offer of a free iPad. A further 15% were tempted by the offer of free flights, while just 15% wanted to avoid an annual fee.

If you're disciplined about paying off your credit card every month, then by all means dive in and take free flights, games consoles or whatever else is on offer. But if you know you'll end up using (or really need) the credit facilities, then ignore the free extras and hone in on the best rate you can. (Note that no-fee cards often have higher rates to compensate).

The one reassuring figure in the data? 62% of respondents had stuck with the same card for four years or more. That might mean many aren't getting the best deal, but it also means they're not being sucked in by offers of extra freebies.

CreditCardFinder


Comments

    Doesn't your last sentence contradict your headline?

    I have two credit cards. One, I actually use and pay off in full each month. The other holds my credit card debt; this debt is paid off slowly, but it is transferred to a new institution (new account) ever 12-18 months, depending on when the low- or no-interest balance transfer period expires.

    At the moment, the latter card is with NAB at 0% until December this year. Around mid-November, I'll arrange to transfer whatever debt is still outstanding, to whichever institution has the best low- or no-interest offer at that time.

    It's quite a simple system, and it means I can still use a credit card for purchases when I need to (on the first card), and I'm paying down my debt all the time at a low or non-existent interest rate.

    I'm surprised more people don't do this.

    Cheers,
    -Hughhh

      On the subject of freebies: if I was tossing up between two cards -- one with no iPad and $200 in card costs (e.g. $100 annual fee, $100 total interest over 12 months) and the other with an iPad and $0 in card costs, I'd probably snag me an iPad. Why not?

      -Hughhh

    One of the nastiest little sucker tactics is the offer of 0% interest on balance transfers for a period. Sounds good - but the conditions regularly specified that repayments had to be credited to the balance transfer balance first - meaning that any actual purchases on the credit card would start to accrue interest quick smart!

    Apparently, all this about to change. Writing in 'The Age', Nicole Pedersen-McKinnon (that is one loooong name) suggests that new finance legislation 'might have the banks in a tiff but it's a winning situation for customers'.

    Well, perhaps it is not so much a matter of 'winning', but losing less often - and at a smaller cost.

    Have a look: http://www.theage.com.au/money/more-power-to-the-people-20110326-1car2.html

    As always, caveat emptor works pretty well for those with the time and appropriate levels of 'nous'. The rest of us need to be very wary indeed!

    I am one of these who does actually pay my credit card off as soon as I get home from using it (debt paranoid). I do tend to take advantage of these "Deals" from time to time. I have one Credit Card only. However, when these deals come along I generally fully read the T&C's to find out if its a good deal or not and then get the Card, exploit the offer and cancel. Generally doing this "might" incur you the annual CC fee. So if the annual fee is say $150 but you get your $500 ipad or whatever for using it 3 times or something...its usually a great deal......you need the discipline to get rid of it (cancel) the second you qualify for your freebie/offer though. I have accrued 85,000 Qantas points for a total cash cost of $200 over the past 18months doing this...which is not bad value.

    As someone who pays off their credit card every month these deals are great for me. At the moment I have 2 cards with 0% interest deals... one ending in June and one in September. I have the money sitting in my savings account earning interest ready to transfer across as soon as the promotional period ends.

    I have never seen a credit card offer that gives out free iPad :( Are there any running currently ? I should apply it and then sell the iPad on eBay straight away, haha.

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