One in five Australians are in the dark about the interest rate on their credit card, despite many using it as the primary or even sole method of making purchases.
Research commissioned by credit union CUA, which polled around 2,000 Australians, found that 51 per cent nominate a low interest rate as an important consideration when choosing a card provider.
Yet 20 per cent, or one in five, are unsure of what their current interest rate actually is, the study found.
That was despite 92 per cent of people polled admitting that they had made purchases on a credit card over the holiday season, with close to one in three (29 per cent) stating that they pay for everything using credit cards.
“Seven out of 10 respondents indicated they had at least one credit card, while we found the average credit card balance was just over $4,000, reflecting that credit cards are a way of life for many Australians,” CUA’s head of product, Barbara O’Conor-Nash, said in response to the findings.
“But if people don’t understand the features of their credit card and how much interest they are paying, they can end up feeling financially stressed.”
She added that only 21 per cent of respondents said that they felt completely in control of their finances, a sentiment that dropped as card balances increased.
According to the survey, the most important features of a credit card nominated by consumers are a low or no annual fee, a low interest rate and the number of interest-free days.
But Ms O’Conor-Nash also urged credit card holders to check whether they are paying extra for rewards points that they may never use, if access is given to digital platforms like Google Pay and also whether there are any conditions around balance transfer offers.
SME owners often rely on credit cards, even personal ones, to pay for business expenses, particularly when during periods where cash flow is tight, making credit card costs an important issue for business owners and operators.
A ranking of customer satisfaction with Australian credit cards released in September put Bendigo Bank as the nation’s top credit card provider.
Last year, Auswide Bank unveiled a credit card with an interest rate tied to the official rate set by the Reserve Bank of Australia.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.