Did you know you can save upwards of $500 simply by switching your credit card? A change in the financial market is nigh, so we’ve brought you expert advice on reveiwing your finances and how to maximise your savings now!
By Anna McDougall, The Money Maven
Australians owe $49.1billion on credit cards with less than a third of people repaying their credit card in full each month. 73% of credit card balances are accruing interest charges amounting to $36.9 billion of the total $49.1 billion owing. Consumers are being urged not to wait for the banks to lower their rates but rather act now to obtain the best credit card and protect their finances.
Jeremy Cabral, finance expert and publisher of credit card comparison website, CreditCardFinder.com.au, says, “Now more than ever it is vital for credit card holders to compare their card against other offers in the market to make sure they aren’t paying too much.”
“Even though the RBA cash rate hasn’t changed, we are urging consumers to take the first step and compare their credit cards against others in the market to secure the best deal possible. There are a lot of low cost balance transfer options which, if used wisely, can provide some short term relief from your credit card debt.”
Jeremy Cabral’s Top Tips on How To Maximise Savings On Your Credit Card:
Switch credit cards by doing a Balance Transfer
This can save consumers hundreds of dollars in interest charges.
For example, the average Australian credit card holder has a balance of $3,300. If your current credit card has an interest rate of 18% p.a.; doing a balance transfer to a 0.99% p.a. for 12 month balance transfer offer could save you up to $539.
Find a balance transfer credit card that reverts to the purchase rate, not the cash advance rate.
This is for your safety and will avoid cash advance interest charges in the event that you can’t repay the balance in the balance transfer period.
Don’t spend on your credit card after balance transfer
If you are committed to repaying your debt, don’t spend on your card following a balance transfer as your purchases will accrue interest charges.
Don’t use your credit card for cash advances
The interest rates are incredibly high for cash advances so avoid withdrawing cash from your card.
Use the balance transfer period to make extra credit card repayments
This credit card repayment approach to take with a goal of having your balance paid in full by the end of the balance transfer period.
Alternatively, you could bank the money saved in interest charges in a high interest savings account to profit from the interest earned during the balance transfer period.
You can then repay your balance before the balance transfer period ends. This would only work if the interest rate earned on the savings is higher than that of the balance transfer interest rate.
Consider a second balance transfer
If you haven’t repaid your balance in full, you could consider a second balance transfer to another provider at the end of your balance transfer period.
By taking action now, consumers can reap the benefits and save money in the long run. “Credit card holders should take the first step in managing their credit finances by doing a credit card comparison to find the right card for them,” continues Mr. Cabral.
“Switching credit cards is incredibly easy and the application process takes as little as 10-15 minutes. In the long run, it is always important to review your credit cards on a regular basis to ensure you’re getting the best deal. Neglecting to spend a few minutes carrying out a comparison online could cost you hundreds of dollars every year in interest charges.”
When reviewing your credit cards it’s important to keep the following in mind:
You shoudld consider a balance transer credit card. You will need a clean credit history in order to do a balance transfer, so it’s important you do a credit check first. If you do decide to do a balance transfer, make sure you pay off all or as much of the debt as possible before the introductory period lapses. Another important consideration to look for in a card is the revert rate after the balance transfer period. The revert rate is the interest rate that applies to any unpaid transferred balances and depending the provider, is the purchase interest rate or the cash advance interest rate. It’s important to find a balance transfer offer that reverts to the standard purchase rate after the introductory period ends.
Some notable cards include the Bank of Melbourne Vertigo MasterCard and the NAB Low Rate Visa
You heard the man! Take your first step and check out the savings at CreditCardFinder.com.au