Do you have a credit card? Here’s how to save as the cost of living rises

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Credit card interest rates haven’t changed much this year, but taking a closer look can lead to big savings.

The latest data from the Reserve Bank of Australia (RBA) shows that the average standard credit card interest rate is 19.94%. This has been this rate since 2019.

In fact, Finder analysis shows that the average standard credit card rate has been above 19% for more than a decade.

This means that credit card rates are not closely tied to RBA cash rate decisions that affect variable mortgages each month.

But there are many variations in the interest rates of different credit cards. So just like refinancing your home loan saves money, switching your credit card can do the same.

Ways to save on your card

  1. Compare low rate credit cards
  2. Compare credit cards at 0%
  3. Calculate what you could save

For example, someone paying $2,000 on a card over a year could save about $124 by getting a low-rate credit card. This is based on the difference in interest charges between the average interest rate of 19.94% and an interest rate of 8.99%.

It’s a key way to save, as research from Power Retail suggests most people stick to paying with a credit card if that’s how they usually pay.

The Electricity Retail Trajectory Report #50 found that credit cards accounted for 29% of online purchases, just behind PayPal.

“We expected to see massive changes in credit card payments and the way people pay, but it’s actually been pretty static and stable,” Natasha Sholl, Power Retail’s managing editor, told Finder. .

People’s payment methods and payment behaviors are pretty ingrained. It takes a lot for them to really change the way they pay.

Natasha Sholl, Power Retail News Editor

So even a small difference in the current interest rate on a credit card can result in savings.

Interest-free credit card offers

Another way to save on interest (for a set period) is to get a credit card that offers 0% interest on purchases or balance transfers during an introductory period.

For example, a card with a 0% purchase rate offer could save you interest for up to 20 months.

On a $2,000 purchase, that could mean savings of around $367 in interest charges compared to paying off that balance in 20 months at a rate of 19.94%.

Someone with $5,000 in credit card debt could save up to $1,684 in interest with a 0% balance transfer offer, which can last up to 36 months. This compares to 19.94% interest on the balance and an average of approximately $561 in interest saved each year over 3 years.

But at the end of a 0% interest rate period, a higher continuous rate applies. If you still have a balance at that time, you will pay interest on it.

Quick ways to see how much you can save

Finder’s credit card comparison charts can calculate potential savings for different credit cards.

For even more detail, a credit card repayment calculator shows you potential costs based on balance, interest rate, and monthly repayments. You can use this to see how much you’ll save with a different interest rate – or even with different repayments.

Want a better rate? Compare the latest credit card offers on Finder.

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