Switch from a higher credit card rate to a Low Interest Credit Card
Posted April 7th, 2010Switch to a low interest credit card with a balance transfer deal
If you thought you could compare two credit cards side-by-side purely by the interest rate charged on them, think again. Apart from different conditions, such as the number of interest free days to various fine-print terms that dictate the interest payment, many banks and credit card issuing organizations employ some ‘deceptive’ practices that make your final interest payment amount end up much higher than would you would expect. Keep them in mind while comparing your credit card rate to that of other cards
Low Interest Credit Card from St.George
St.George offer a low interest credit card called the St.George Vertigo MasterCard. It will give you a low interest rate on both purchases and balance transfers, and is a great card to consider if you are looking to switch credit cards.
- $55 annual fee
- 13.24% p.a. on purchases
- 0.99% p.a. for 12 months on balance transfers
- Cash Advance Rate of 21.49% p.a.
- 55 days interest free
- Minimum Income Requirement of $15,000 p.a.
No Partial Repayment Credit
Let’s say your last credit card bill was for $800, and you paid $400 as a partial repayment before the due date. You would expect to be charged interest at the remaining $400 at the quoted credit card rate which could be anywhere from 10% to 20%. However, recent studies on Australian credit card interest charging practices suggest that most likely you would be charged for the full $800. Most credit card operators apparently do not give any credit for partial repayment and charge interest for the full amount.
The Balance Transfer Trap
Certain credit card offers proclaim a period of ‘interest-free’ days if you transfer your credit card balance over to them. If you made the switch to avail yourself of a 6-month interest free period (say) then you would expect to be charged at the advertised low rate after those 6 months end. It might turn out that you’re being charged on your balance at the cash advance rate, which in the worst case scenario could mean a difference from an advertised low rate of 10% to a cash advance rate of 20%.
Interest Backdated to Purchase date
Another unfair practice is backdating interest charges. In an independent study the consumer group Choice has found that backdating interest is prevalent among many credit card companies. This is the case where, if you are late in paying your bill by even one day, (or if you do a partial repayment) then interest is charged from the date of original purchase, and not from the end of the interest free period. This in effect is a complete cancellation of the interest-free period if the bill is not paid in full in due time.
Therefore, the next time you are considering switching to a low credit card rate deal don’t simply compare the quoted rates, read through fine print too and be aware of these hidden interest charging practices.
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0% p.a. for 6 months on purchases & balance transfers |
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0% p.a. for 6 months on purchases & balance transfers |
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