You'd think with the amount of competition in the credit card market at the moment we'd be paying closer attention to how much interest we're being charged and whether we're actually paying more than we need to!
But according to a recent online survey, credit card rates are at the bottom of the 'care-factor' list when it comes to managing our personal finances. The survey found the majority of Australians are more interested in reducing debts, planning for retirement and superannuation.
Now, that's fair enough, they're all important financial issues to consider, but this survey got me thinking ... why would you want to pay more for something if you didn't have to?
Sure, many of us can't be bothered switching cards because of the pages of fine print that come with every offer, or the hidden pitfalls. But if you do your homework and find out exactly what's available, there can be substantial benefits.
These days, with the average Australian owning more than two credit cards, many financial institutions are practically falling over themselves to offer the best deal on the market. That's why I reckon it's best to shop around, regularly review the cards you have and substitute better cards for the ones you aren't happy with.
For instance, there are quite a few institutions which will allow you to transfer your credit card debt from your current card and pay no interest ... sometimes forever! These plans can provide an excellent opportunity to get rid of your debt faster so long as you use them properly and read the fine print.
For starters, there's no point transferring your balance and not paying it off. Worse still, transferring it and continuing to rack up debt on your card. In most instances, the balance transfer offers charge higher interest rates on purchases you make with your new card.
It's also worth considering that most of the offers have a time limit for the zero interest, usually six months. After that, interest reverts to the regular rate, which may even be higher than your previous credit card provider!
According to the competition watchdog, ASIC, there are four key questions all consumers need to ask a card issuer, before considering a credit card re-shuffle. They are:
1. What's the standard interest rate?
2. Does the special introductory rate apply to all purchases or cash advances during the introductory period or only to the balance transferred?
3. Will you pay off my existing credit card account immediately when I join up?
4. What credit card limit will you give me if I transfer over?
So next time you receive that new credit card offer, consider taking the time to compare the pros and cons, particularly if you're not happy with your current card. If you're not sure, it's always best to seek professional advice from a financial advisor.