Big four still taking us to the cleaners
It's all well and good that ANZ Bank has had the good grace to reduce its Low Rate Platinum credit card interest rate by an impressive 2.00%, down to 11.49% per annum.
It's a move in the right direction.
But you don't have to dig too deep to find a mother lode of better rates, particularly if you take a look at the customer-owned bank sector.
Credit union and building societies (also known as mutuals) have long offered lower rates than the big four banks and the major banks in general.
You could even argue that the term "low-rate" should be reserved for cards that stay below the 10% mark.
Here's some compelling evidence.
Customer-owned banks credit card rates
- Community First Credit Union McGrath Pink Visa – 8.99%
- Bank Australia Easy Low Rate Visa – 9.39%
- G&C Mutual Bank Low Rate Visa – 9.49%
- Victoria Teachers Mutual Bank Visa Platinum – 9.99%
"Low-rate" cards from the Big Four Banks
- ANZ – 11.49%
- Commonwealth Bank – 13.24%
- Westpac – 13.49%
- NAB – 13.99%
If you carry a balance on your credit card and pay interest, the difference between 8.99% and 13.99% is nothing short of huge – especially if you get stuck in the quagmire of long-term credit card debt.
If you had a $5000 debt on a 13.99% credit card, made no other purchases, and paid only the minimum payment every month, you'd end up paying $10,947 over the 21 years and 11 months it would take you to pay off the card.
The same scenario with an 8.99% card would see you paying $7625 over the 15 years and 10 months it would take you to pay off the card.
Big four lag behind
Thanks to recent analysis provided by Mozo, we can report that the mutuals are well ahead of the big four when it comes to low rates – and have been for some time.
- Among the big four banks, the average credit card interest rate is currently 18.94% and the average annual fee is $146.
- By contrast, the average interest rate for credit cards from mutuals is 13.33% and the average annual fee is just $56.
DISCLOSURE FROM CHOICE: Our CEO Alan Kirkland is part of an independent expert panel appointed by the federal government to review the framework for external dispute resolution and complaints in financial services. You can find out more about the review and make a submission through the Treasury's website.