Aussies advised to review credit card deals as changes hit customers

Australian customers are urged to have regular health checks on their credit cards as plastic users will soon be hit with changes to deals like higher interest rates and reduced interest-free days. The purchase rate for some popular products will rise to 13.74 percent from 13.24 percent starting April.

Spokesperson for financial comparison website Ratecity’s Sally Tindall said that customers need to pay attention to all the changes happening to their credit cards. She cited rate hikes, annual fee changes and changes to the interest-free deals.

“Sometimes you may miss the notification from your lender so it’s a good idea at least once a year or every six months check your interest rate, interest-free days and the annual fee, they are the biggest places they can sting you,” News.com.au reports Tindall as saying. Credit card deals continue to fluctuate even though no change in the cash rate has been recorded since 2016.

Coles credit card customers will see interest-free periods get shorter to 55 days from 62 days starting March 5. Those who can expect the change are customers with a low rate Mastercard, no annual fee Mastercard or low rate platinum Mastercard. This means Coles credit card customers have a week less to pay back debt in full so they won’t incur interest charges.

Some financial institutions are increasing interest rates to some popular products including the “Vertigo Classic” credit card. Bank of Melbourne and St George Bank customers can expect higher rates in the future. Credit card users can expect to pay an extra $348 in interest on the average card debt of $4,073.

Last year, interchange fee regulations that capped Visa and Mastercard credit cards at 0.8 percent were introduced. Customers were hit with higher charges.

The Reserve Bank of Australia is expected to keep the cash rate on hold at 1.5 percent. Plastics are likely to come under scrutiny in the banking royal commission.

Although credit cards are great for convenience, they come at a big cost. “Credit cards are structured to give you that honeymoon period early on where you can guilt-free shop but later down the track you end up paying significant amounts of interest,’’ Marketplace lender DirectMoney’s chief executive officer Anthony Nantes said.

Meanwhile, the country’s biggest banks have said they do not have plans to block their customers from buying Bitcoin at the moment. Some US banks will ban customers from using plastics to buy digital currencies.