Is it Time to Change Credit Cards?
Posted December 20th, 2008
and last modified March 16th, 2010Occasionally we find ourselves dealing with the wrong sort of product – one which we continue to use even though it’s costing us more than an alternative would.
Credit cards are no exception – whether it’s a hasty decision or simply ill-informed, even one of the best credit cards can become an expensive hassle if it’s not suitable for your lifestyle. You know it’s time to change credit cards when:
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Low Interest Card Owners:
You’ve received your $75 annual fee for the 2nd time, and realise you’ve only used your credit card no more than a few times in the past 15 months. In theory, it’s cost you $50 everytime you’ve used your credit card. Unless your content paying at this rate, it’s time to change cards.
- The Solution:
- Since you’ve only used your cards sparingly and for emergencies, it’s best to go for a no annual fee credit card that won’t cost you for laying around un-used.
Click here to compare the best of Australian no annual fee credit cards.
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No Annual Fee Card Owners
This situation is practically the polar opposite of the former; You have a no annual fee credit card but find yourself using it more than you planned. Most no annual fee credit cards come with 0 interest free days (those which do are typically only ‘first year no annual fee’ offers.)
As interest accumulates from the date of the purchase, there is no grace period for no interest repayment. Not only this, but no annual fee credit cards have relatively high interest rates.
- The Solution:
- Since you use your no annual fee card more than it was designed for, you would benefit much more from a straight-up low interest rate card. While the annual fee will be $40-60, the interest rate will be up to 8% lower than a typical no annual fee credit card. If you accrue more than $80 of interest per annum on your no annual fee credit card, it’s time to consider a low interest card instead.
Click here to compare the best of Australian low interest credit cards.
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Reward Card Owners
Reward credit cards require a special breed of discipline to manage and benefit from. Reward points are expensive – you’ll be paying up to $150 per “$1 value of reward points” for some cards. read our reward credit card guide to become familiar with the concept of ‘point currency’.
If you own a reward credit card and either:
- Regularly pay interest on your purchases/cash advances
- Don’t spend enough on your credit card per year to offset the annual fee (which works out to be $8000+ in many instances).
- The Solution:
- Everybody loves to be rewarded for spending. You’ll either have to steady up on your repayments and/or start using your card more, or consider a different sort of credit card.
You have many options available to you. Compare the offers which suit you most, for instance a low fee card if you sparingly use your card.
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Gold and Platinum Card Owners
Just like everyone loving rewards, everyone loves that extra bit of status associated with gold or platinum ownership. However, you’re going to have to ask yourself just how worth the prestige is for fees and interest your paying.
- The Solution:
- If you utilize your Gold/Platinum card to it’s maximum, it does become a useful tool for automated travel, security and insurance benefits.
- Gold and Platinum credit cards average an annual fee of $150-$250. Do you use your card luxuries enough to offset this cost?
If your after the prestige of one of these cards without the hefty price – consider the St George Gold Cad and Platinum Card. The St George Gold Card has a $79 annual fee, and the St George Platinum has a $89 annual fee.
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The Cash Advancer
From time to time, many of us are in need of some emergency cash in hand. Unfortunately, 95% of credit cards aren’t very generous when it comes to cash advances. You’ll be hard pressed to find a credit card that offers below 17% on cash advances, and impossible to find one with interest-free days. Although difficult, some lower cash rates are available. View the best cash advance credit cards here.
Related Article
How to manage your credit cards – Fido
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