Don’t get me started on credit card interest rates… the only financial product to not cut its interest rates despite official rates being at historic lows. And, according to the Reserve Bank, staying this low for years to come.
It’s pathetic. And regular readers would be aware of previous newsletter which have pointed you to the best value cards.
But to get fundamental charge I reckon you need to publicise the worst offenders and try and shame them into changing.
Consumer watchdog Choice have looked at all credit cards available and concluded the worst 5 are:
– Latitude Gem Visa: 24.99 per cent
– Latitude Mastercard: 24.50 per cent
– Skye Mastercard: 23.99 per cent
– Latitude GO Mastercard: 22.74 per cent
– Latitude 28 Degrees Global Platinum Mastercard: 21.99 per cent
CHOICE is calling on banks to cap interest rates at 10% to stop the spread of long-term credit card debt… and I couldn’t agree more.
According to CHOICE, if you had a $5000 credit card debt with Community First’s 8.99 per cent credit card and made only minimum repayments, you’d pay $7625 over the 15 years and 10 months it would take to pay off the debt ($2625 in interest)…. Assuming you didn’t keep spending on the card.
If you had a $5000 credit card debt with CBA’s 19.74 per cent card and made only minimum repayments, you’d pay $23,078 over the 43 years and four months it would take to pay off the loan ($18,078 in interest).
That difference is $15,453 in interest and 28 years 6 months in the time it takes to pay it off.
A common theme of these high interest credit cards is that they are commonly offered through retailers as a way of financing a big purchase.