In the aftermath of a property bubble, Australians rethink credit card interest rates

Australians have increased credit card debt by staggering proportions, especially during the recent downturn in the property market. Many small buy-to-let landlords faced a cash crunch, along with thousands of households, which were affected when they suddenly could not sell their properties or had to face loans that were recalled. But how can interest rates be reduced on credit cards?

Lower interest rates still do not benefit many credit card users:

Many consumers in the Australian market increased their willingness to live on credit card debt at the thought of lower interest rates. In reality, though, many card users do not yet benefit from these new low rates. This comes as the RBA announced lower interest rates which are meant to stimulate the housing market. The RBA admitted at the same time that “We can be confident that lower interest rates will push up asset prices, and I think that later on we will have problems because of that,” (RBA governor Philip Lowe).

Just how much do Australians love their credit cards?

With around $50 Billion in credit card debt and as much as $5.3 Billion paid in credit card interest last year alone, with a staggering $1.5 Billion in credit card fees alone, it is fair to say that for a nation with less than 25 million inhabitants, the country is fairly dependent on credit cards, or that consumer behavior and trends, simply led to a love affair with credit cards. The reality though, is that when not properly managed – or with a bad deal on credit cards, many people can hit a debt trap – as Aussie debt collectors will easily bankrupt citizens for small amounts of card debt.

Tapping into lower interest rates:

Many people are still stuck on expensive credit card deals and did not take the necessary action to make sure the rates they pay for credit, reflects new lower rates that ought to be available nationwide. Fortunately, people learn quickly in adverse circumstances: the best tip given by some financial advisors would be to start using smarter tools. For example, you can shop for better rates and even low to zero interest on balance transfers when switching to another card provider.

Despite the obvious benefits of switching card providers, in many parts of the world, people are more likely to get divorced, than to switch their phone number or bank account. By not switching, their loyalty comes at an incredible expense.

Enabling consumers to really tap into lower rates has been made easier in recent years. Roland Bleyer, the CEO of Credit World Pty Ltd says: “Australians collectively pay $1M per day in foreign fees alone, along with other fees that are way too high. Often these great expenses are simply a matter of convenience. The resource creditcard.com.au was created to help people shop for a better deal and ultimately, to take back some of their hard-earned money from the banks”.

He also went on to explain that often, students and temporary residents pay a fortune for the “privilege” to use an Australian credit card – or face difficulties in opening an account. In designing the comparison platform, they partnered with many top providers who are more inclusive of everyone residing in Australia – even temporary residents.

Conclusion:

The banking market in Australia has opened up in recent years – consumers now have to jump at the opportunity: especially if loyalty gets you penalized. With a super-fast platform that compares all the top providers, Australian consumers can really shop for a better deal in minutes. The main ways to save, include balance transfers, taking card providers that has a low principle interest rate – and by choosing a card with benefits to match your lifestyle, for example, international travelers and frequent flyers, can get huge rewards by choosing the right card. Whatever the Australian housing market and interest rates do at a macro level, it is still up to the consumer to deploy tools that can help them identify the best deal.