Credit cards

 

Most of us would have a credit card in our wallets. With the big banks and smaller lenders promising us rewards and vouchers for our business.

But are you getting a good deal?

So how much is too much to be paying for a card? And are you being ripped off?

"If you're constantly juggling debt and there's about 43 billion dollars' worth of debt that we're paying interest on then you absolutely need a low interest rate card and forget about the rewards, you're paying too much in interest to justify them."

While the reserve bank interest rate has remained low, the rate on credit cards is soaring. If credit card interest rates had moved in line with the reserve bank cuts, Australian credit card holders would have paid a whopping 2 billion dollars less in interest. Justine Davies from comparison website Canstar has crunched the numbers most of the cards on offer in the country. "200 credit cards which is the vast majority of cards on the market and I have to say there's a huge difference between the minimum and the maximum interest rates that are out there." So it pays to shop around and do your research.

If you're a big spender and carry a debt each month, a low interest rate is for you.

Quay credit union is the best on the market with an interest rate of just 7.99%

They're closely followed by community first credit union and bank members' equity credit union.

When it comes to the best interest free periods- Coles, people's choice credit union and beyond bank all offer a 62 day interest free wait.

If you're after a card with a low annual fee- me bank, uni bank and beyond bank all have cards on offer.

And if you're after rewards. The best cards according to Canstar are American express, ANZ, NAB and Commonwealth bank who all have deals with our major airlines.

But a warning, don't be lured into thinking it's for free. "Canstar analyses has found that generally you need to be spending about 24 thousand dollars per annum just on your credit card to really get the benefit of rewards programs, we do all like something for nothing but if you're not spending enough to justify the fee, then you're actually really paying for it."

"Credit card rewards and the points are designed to make you spend more, you pay for them, and they're not free." Cheapskates founder Cath Armstrong is sceptical about any benefits of owning a credit card. "Credit cards just entice you to buy something you can't afford to pay for right now, they get you into a debt cycle, they encourage you to want things that you really can't afford, no, they're just horrible." she says it's simple, if you can't afford it, don't buy it, save up instead.

For more information

Canstar

www.canstar.com.au/credit-cards

The Cheapskates Club

www.cheapskates.com.au