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Australian consumers have a new ace up their sleeves for lower interest rates

As the RBA lowered interest rates, the benefit has not quite trickled down to consumers, so now they decided to use credit card comparison websites to access the open market.

What the numbers say about Australians and credit cards

Australians always had a healthy appetite for credit. When compared to many countries, a disproportionate number of Aussies travel abroad each year, as true explorers. This is one of the reasons why collectively, the country spends in excess of $1.5 Billion in credit card fees derived from Foreign fees alone – which is more than $1 million dollars a day. Many did not know that there are card providers in the country that actually charge no foreign fees, so they coughed up millions.

According to debt statistics, Australians hover at around $50Billion in credit card debt – but that comes at a hefty price tag: some $5.3Billion is paid annually on the interest. This is entirely voluntary if you consider that these days, an option exist to do away with most excessive interest on card purchases. After all, the business model of many card providers is mainly based on the vendor processing fee, rather than the interest they charge the consumer.

Outfoxing the old system with credit card comparison sites:

Since the market opened up, there is much nearer to 80 credit card providers in Australia, giving the consumer more choice than before. The problem? Habit and mindset. Many people still lose out because they are not used to the idea of switching providers. As Roland B. Bleyer, founder of CreditCard.com.au said: “The smart consumer now re-evaluates their options periodically to ensure they have an advantageous deal from the most competitive card providers. We provide a platform to enable that in a matter of minutes, so that the right consumer can be matched with the most appropriate card solution for their needs. Off course we know this is  new phenomenon in Australia, so we make it our business to educate people by means of the highest quality courses they can access in the free education section of our comparison website”.

 

What are the potential benefits of switching card providers?

People who learn how to navigate the system can benefit immensely from having a new card provider. Yet those who keep piling up debt, or use this as a temptation to exceed their limits, invariably struggle to realise a big benefit.

Generally there are four main benefits in switching: A better rate than your existing provider is often the most attractive on the list. Better rewards are also notable, especially in specific circumstances, for example were people travel a lot and make big item purchases via credit card. Reduced fees, whether annually or per transaction, is also a good reason. There is also the issue of credit score in many countries, which influences the decision on switching. Balance transfers in Australia, is fast becoming one of the most popular reasons for switching – rather similar to how people handle their mortgages.

Other ways in which people save money with their credit cards:

There are other advantages also that are slowly making their way into the Australian market, with others that are still not fully implemented. From a global perspective, cashback on big purchases is a huge incentive. Sign-up bonusses are also popular as it puts the system on the backfoot compared to the position of the consumer. In many cases, no car rental insurance is required for certain card holders, so it greatly reduces the risk of rip-offs from car companies. Free travel and hotel stays are also a possibility with some cards, which racks up quickly when bigger purchases are made.

 

Conclusion:

Did the big banks underestimate the Australian consumer for too long? Perhaps yes! Yet Australians are starting to do things differently. They no longer see the big banks through the same lens and are taking them to task on competition. By using credit card comparison engines, the Australian consumer is now in the drivers’ seat for good. According RBA statistics, the country issued some 450 000 new credit cards in the last year alone – this is surely a space to observe closely.

Francisca Sequeira

A late bloomer but an early learner, Francisca likes to be honestly biased. Though fascinated by the far-flung corners of the galaxy, she doesn’t fancy the idea of humans moving to Mars. Francisca is a Contributing Author for Newstrail. Be it tech trends, mobile devices, laptops, etc. he brings his passion for technology wherever she goes. Needless to say - she enjoys covering luxury tourism too.
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