Credit Crisis: No Crisis for Credit Cards
Posted October 13th, 2008
and last modified May 5th, 2009With everyone scampering over their shares and superannuation drastically dropping, the thought of unsecured credit can send shivers down spines across the nation.
The situation with credit cards is no different now in comparison to a time of economic stability: There’s debt, and there’s bad debt.
If you’re in a bit of a financial crisis or just worrying yourself, you’ll simply have to take the precaution of strategized planning and budgeting for your credit.
By utilizing balance transfers, or simply making responsible, fast repayments, you can effectively pay from 0-7.9% interest for any period of time on your credit cards.
Method #1 – Responsible Repayments
For starters, there’s no great solution for cheap cash advances. 55 interest free day periods only apply to purchases, and the cash advance rate is often significantly higher than the interest rate.
If your main focus will be frequent cash advances, you should consider the St George ‘Starts Low, Stays Low’ Credit Card.
For purchases however, you’re interest free if you pay off within the grace period (which is mostly commonly 55 days, occasionally 44).
The trick is, it’s not 55 days from when the purchase is made, it’s any purchase made in-between the 55 day gap between your previous and next statement.
If you’re having any trouble getting your head around the concept, more information is available on our 55 day interest free article.
The only other cost you’ll have to account for is annual fees – as a general rule of thumb (not including reward program credit cards) , the lower the annual fee, the higher the interest rate.
Of course, if you pay off your purchases within the grace period 100% of the time, then the high interest rate is meaningless to you.
You need to ask yourself however, if you’ll occasionally miss a payment or grace period, then the higher annual fee may compensate for the interest you’ll be repaying.
Your best options for Method #1 are on our main ‘Top 11′ table, or the low interest rate credit cards.
Method #2 – Balance Transfer
It’s a common technique for saving money in general for credit cards, and no exception for a credit crisis. Overwhelmed by the idea, or even fact of your maxed out credit cards and their 15-20% interest rates bombarding you with excessive repayments and bills?
Well, the solution is to simply bundle all your balances together, and transfer them over to a single credit card with a lower interest rate, performing a balance transfer.
If you think you’ll be able to repay off your balances quickly, then there are plenty of 0% balance transfer offers available in Australia.
Australian 0% Balance Transfer Offers – Best Short Term Solution
The St George Vertigo MasterCard has a $55 annual fee, the lowest purchase rate (11.39%) and is renowned for being the ‘Cheapest credit card of 2007 and 2008 by Money Magazine’, along with extensive St George customer service.
The GE Money Eco MasterCard has a $49 annual fee, a relatively high purchase rate (18.49%) and offsets every dollar you spend on your credit card towards environmental rehabilitation, research and stability.
The ANZ Balance Visa Card has a $57 annual fee, a moderate purchase rate (12.74%) and features a reward program (balance transfer repayments do not contribute to reward point accumulation, however).
Australian Life Balance Transfer Offer – Best Long Term Solution
Currently, there’s only two ‘long term’ balance transfer card on the Australian market, and it’s no surprise why the two Citibank offers are exceptionally popular.
The Citibank Emirates Credit Card has a $199 annual fee, a modest interest rate (19.99% on both purchases and cash advance), and a 4.9% balance transfer offer for life.
The Citibank Platinum Card has a $250 annual fee, interest rate of 18.99% and 4.9% balance offer for life. A higher annual fee than the Emirates card, yet still a valuable 4.9% p.a. on balance transferring. Also, you’ll need to earn at least $70,000 annually for Citibank approval.
A daunting figure initially, when you put it into perspective, you’ll be hard pressed to find a better long term credit solution from an Australia financial institution for the time being.
Crisis Averted?
As mentioned before, it isn’t a credit crisis which will bring you into bad debt, it’s simply irresponsibility and a lack of budgeting for your credit. To strategize your credit card repayments and plan, it would be wise to see and utilize our credit card calculator. The offers previously mentioned can be found in the comparison table below.
Related posts:
- The Effect of the Global Financial Crisis on Australian Credit Card Companies
- Common Causes for Financial Crisis
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Editor's Choice: Our Top Credit Cards
St George Vertigo
Low Interest
Low 2.99% for 6 months (reverts to 11.99%) p.a. interest rate and balance transfer rate, from one of Australia's most respected banks.
Coles Group Source MasterCard
Bankwest Zero Platinum MasterCard
No Annual Fee
Excellent introductory offer with a $0 annual fee for the life of the credit card and a 1.99% p.a. for 9 months on balance transfers