Unless you are one of the 2% of Australians in the loop, 98% of us are not only unaware of the credit card reforms that start July 1st (today!) but that you can save over $2.4 billion in credit card charges! Sound too good to be true? Read on to see how now is a better time then any to switch and save.
by Anna McDougall, the Money Maven
Did you know Australians are currently carrying a whopping $49.3 billion in credit card debt? You should probably take a seat…
Jeremy Cabral, Publisher of CreditCardFinder.com.au says, “Now consumers will know how much it’s costing them to repay their credit card debt, and the message is simple: Fight the Debt. Compare the cards on the market and bag yourself the best deal on July 1st in order to save money before the banks start modifying their offers.”
“Consumers are in the dark about the savings they could make by simply comparing the cards on the market and switching on July 1st. Being savvy now will mean taking advantage of some incredible credit card deals that may not exist once the banks respond to these changes,” says Mr. Cabral.
What You Should Know About The Reforms:
1. Unlike now, your credit card repayments will be allocated to the part of your balance the banks earn the most interest from, rather than the least. This means that repaying your debt will be much faster. Under this reform, credit card holders will reduce their balance quicker than ever before. This is only applicable to new cards and not to the current cards consumers currently have.
Credit card holders should consider switching cards to take advantage of this new reform that will assist to clear their debt faster. For example, on a typical Australian credit card balance of $5,000, with a repayment of $130 per month, you can actually save $333.36 in interest charges and three months off payoff time just by switching to a different card under this reform.
2. In 2011 the banks made $487 million in exception fees which includes over-limit fees on credit cards, according to the Reserve Bank. The new reforms will mean that over-limit fees will be banned unless you specifically agree that your lender can charge you a fee for the service. Translation: Win for us! Watch your pockets grow.
Use the reform to your advantage by checking the terms and conditions of your card, comparing other cards on the market and switching to get a better deal that will not allow your financial institution to charge them over-limit fees.
3. Monthly statements will now include personalised information such as how long it will take credit card holders to pay off their entire balance if only making minimum repayments monthly. Most consumers get stuck in a rut paying only the minimum interest repayments on their credit cards.
Paying as little as an extra $50 per month would result in the card being paid off in just 3 years and 11 months, with only $2,126 paid in interest charges. This means a saving of over $17,219 in interest charged if only paying the minimum repayment amount. This information will be made clear on each credit card statement, so as of July 1 consumers will know what to compare, and which cards they should switch to in order to save on interest repayments and clear their debt faster.
Some notable cards include the Bank of Melbourne Vertigo MasterCard and the NAB Low Rate Visa
So get cracking – take your first step to a better understanding of the new credit card reforms and compare at CreditCardFinder.com.au