New research indicates that Australians incurred an estimated $1.6 billion in unnecessary credit card interest during the past year.
Key Findings from Canstar Survey
A survey of 2,029 credit card holders, conducted by the finance comparison site Canstar, revealed significant insights into consumer behavior. One-third of respondents had never reviewed or considered switching their credit card. Another segment of respondents indicated they last reviewed their card over a year ago. Only 45 percent had reviewed their card within the last 12 months.
"One-third of respondents had never reviewed or considered switching their credit card."
Canstar Analysis on Interest
Analysis from Canstar found that the collective credit card interest paid by Australians exceeded $3.4 billion. This was based on an average credit card interest rate of over 18 percent on total debt.
The analysis suggested that this collective bill could have been nearly halved, resulting in approximately $1.6 billion in savings, if indebted customers had switched to cards offering rates of 10 percent or less.
Sally Tindall, Canstar's data insights director, noted that credit card loyalty is costing Australians substantial amounts in unnecessary interest. She highlighted that credit card interest rates in the market currently range from 8.99 percent to 28.49 percent.
Credit Card Fees Increase
Data from the Reserve Bank of Australia indicates that banks collected almost $1.59 billion in credit card fees for the financial year ending 2024. This represents an 11 percent increase compared to the previous financial year.
Recommendations
"Tindall recommended that Australians review their credit cards annually."
Canstar's data insights director, Sally Tindall, recommended that Australians review their credit cards annually. This review should include checking the interest rate, fees, and the actual value of any rewards points. If the value of rewards does not exceed the interest and fees, it may be time to consider switching cards.