ARE you one of the 73 per cent of Australians who do not pay their credit card balance in full each month? If you answered yes, you are getting charged 10-20 per cent interest on your card’s outstanding balance.
Australians owe a record $50.6 billion in credit card debt – and $37 billion of that is interest charges.
CreditCardFinder.com.au publisher Jeremy Cabral said that cardholders who took action now and made a balance transfer could save themselves hundreds of dollars in interest repayments in the long run. He offered some simple tips on how to maximise savings.
Switching to a credit card with a balance transfer can save hundreds of dollars in interest charges. The average Australian credit card balance is $3300. If your current credit card has an interest rate of 18 per cent per annum, doing a balance transfer to a 0.99 per cent per annum card for a nine-month balance transfer offer could save you up to $407. If you make extra repayments on your card during this transfer period, you could pay off your debts even sooner.
Another great way to save money is to make balance transfers to a credit card which reverts to the purchase rate after the transfer period ends, and not the cash advance rate. This acts as a safety net in case you don’t pay off your balance during the transfer period. If you still haven’t been able to repay your balance in full at the end of the transfer period, a second balance transfer to another provider could be the best option.
Avoid spending on your card after making a balance transfer, as these purchases will accrue interest charges. Steer clear of cash advances and withdrawing cash from these cards, as the interest rates for these transactions are very high.
• CreditCardFinder.com.au is a free service for comparing credit cards in Australia.
