· Most people don’t know who offers the lowest rates on credit cards.
· Around a third of people don’t know the interest rate for their card.
· 63% said they will use a credit card for Christmas spending.
A poll on Christmas credit card spending has underlined the need for better consumer education to promote competition in the credit card market.
The Essential Research poll of 1000 Australians on Christmas shopping spending found almost a third of people surveyed didn’t know the current interest rate on their card and more than half didn’t know who offered the best deals.
“There’s no doubt people are very aware of the convenience offered by credit cards,” COBA CEO Mark Degotardi said.
“But there’s a knowledge gap we need to bridge so consumers can get the right card for their individual circumstances.
“There are additional costs at Christmas and consumers need to walk away from cards charging high rates of interest when there are substantially better deals elsewhere.”
The Essential poll research found:
- 29% answered ‘Don’t Know’ when asked their credit card interest rate, while 14% thought it was 5% or less;
- 55% answered ‘Don’t Know’ when asked who offered the lowest rate cards;
- 63% will use a card this Christmas, 41% will use their credit card for at least half their spending, and 14% will use one for all of their Christmas spending including gifts, travel and food.
The customer owned banking sector is recognised as an industry leader on credit cards.
Nine of the top ten low-rate credit cards are offered by customer-owned banking institutions, according to the Mozo Experts Choice Awards 2015.
The latest Canstar figures reveal credit card interest rates from customer owned banks, credit unions and building societies are much lower than the big four banks.
On average the customer owned sector is 5.20% lower, with the big four average rate at 18.06% and the customer owned banking sector average rate at 12.85%.*
COBA’s submission to the Senate Inquiry on credit cards called for a communications campaigns to better inform and empower consumers in the credit card market.
“This polling is further evidence of low consumer awareness about the risks associated with credit cards which include high interest rates and annual fees.”
“We support measures that will lead to a more informed credit card market.”
The Award Winning Bank of Heritage Isle Low Rate Visa Credit Card offers a low ongoing rate of just 10.76%.
* Figures calculated using standard personal credit card (unsecured) data sourced from Canstar Online Database on 04 December 2015, with gold, platinum and premium cards excluded.