Australians 'naive' about credit card debt - news.com.au - 4 March 2013
The naivety of Australians and their debts is concerning, says Creditcardfinder's Jeremy Cabral.
CREDIT card users owe almost $50 billion, but two in five people have no idea what interest rate they are paying on their card.
New research by creditcardfinder.com.au found 40 per cent of Australians are unaware of their card's interest rate despite Reserve Bank of Australia figures showing the nation owes $49.9 billion on cards including $35.4 billion accruing interest.
CreditCardFinder publisher Jeremy Cabral said the naivety of Australians and their debts was concerning, particularly with interest rates on cards often around 20 per cent.
"A lot of people view credit cards like a set and forget product,'' he said.
"They are not comparing and switching as often as they should be, they are being complacent and not paying attention to their monthly statements.''
Plastic reforms were introduced last year which made credit cards more transparent for consumers.
Financial institutions were forced to provide customers with information on how long it would take card users to pay off their debt if they only made minimum monthly repayments.
Canstar financial analyst Adam Beu said all card users should know their card's interest rate.
"They should definitely be aware of what their purchase rate is...this is even more important if you are paying interest on your credit card,'' he said.
"The lowest interest cards on the market are 9.5 per cent and the average of the highest interest cards are around 19 to 20 per cent and you are looking at up to 25 per cent for some of the store cards.''
The research also found nearly one in two Australians (49 per cent) use their credit cards for necessities including groceries, petrol and bills, followed by shopping online (16 per cent) and emergencies (14 per cent).