Are you tired of the outrageous interest rates the banks are still charging on credit cards? Understandably there’s a growing trend of getting rid of them altogether!
Frankly the banks and credit card companies have been treating us like mugs for so many years, but now we’re telling them to get stuffed.
The interest charged on outstanding credit card balances is simply outrageous. While official interest rates are at record low levels, credit card interest rates have continued to stay at exorbitant levels – at 15-20 per cent.
This at a time when, as outlined earlier, the same banks have cut savings rates to nothing.
Number of credit cards is declining
So it’s good to see the number of credit card accounts has dropped by more than 900,000 in the last 12 months as Australians continue to turn their back on plastic.
The RBA credit card statistics show debt accruing interest in April has also dropped 0.3 per cent in the last month, but because of Covid the average debt per credit card account has risen slightly.
The average credit card debt per account has dropped by an impressive $297 dollars since April 2020. Unfortunately, this figure has started to plateau, which suggests some credit card holders are stuck on the debt treadmill.
Clear your credit card debt
If you’ve got stubborn credit card debt, don’t just accept it. Come up with a plan to clear the decks and give credit cards the flick. One option is to switch the debt to a personal loan which forces you to repay the money in full, without being able to rack up new debt.
More good tips to clear debt here: 5 tips to get on top of your debt before the end of financial year
Zero per cent balance transfer deals are often touted as a way to clear debt. However, these cards can come loaded with traps that have the potential to get you into more trouble. So be careful.
PayPal is the latest to offer a rewards credit card
Unlike recent new credit cards from NAB and CBA, which charge fees instead of interest, this new PayPal card is focused on rewards. There’s no annual fee, but a whopping 20.99 per cent interest.
There are currently 69 financial institutions proving credit cards and almost 40 per cent of these offer rewards cards. PayPal’s credit card competition: rewards cards with no annual fees.
Yes, Australians love the idea of getting something for nothing. Beware, though. You’ll be hit with interest charges of 20.99 per cent if there’s money owing at the end of the month. So a ‘rewards card’ is not the way to give credit cards the flick!
More tips to clear debt: Six ways to manage mounting debt
Earning rewards points without having to pay an annual fee can be an attractive proposition for diligent customers. But it’s not yet clear how many points customers will need to redeem rewards. So the devil could still be in the detail.