Credit card secrets that can save you cash


Credit cards are losing ground to buy now, pay later lenders such as Afterpay and Zip Pay, but 17 million cards still remain in the hands of Aussie consumers.

Their to deliver convenience and rewards - or crippling debt spirals - remains high, so cardholders should know their secrets and traps.

Reserve Bank of Australia data shows personal credit cards on issue have dropped 17 per cent in two years yet people still owe $35 billion on their plastic, with $22 billion of that charging interest at an average rate near 20 per cent.

Comparison website's spokesman, Tom Godfrey, says credit card interest rates have been rising despite mortgage interest rates falling in the last three years.

Cardholders should avoid cash advances, which come with hefty fees and interest rates near 29 per cent, and be careful about introductory credit card interest rates.

"While an initial 0 per cent interest rate seems like a great deal, make a note of when the offer period ends as the interest rate can jump up above 20 per cent," Godfrey says.

Carmen Torraca, pictured with son Jarrah, 7, uses her credit card carefully. Picture: Lachie Millard
Carmen Torraca, pictured with son Jarrah, 7, uses her credit card carefully. Picture: Lachie Millard

People should take advantage of interest free periods on credit cards - usually 44 or 55 days - but understand how they work, and don't be late paying, he says.

"If you don't pay your credit card off on time, not only will you be slugged a late payment fee, you'll lose any interest free days. Mozo analysis has found the average late fee is $20."

Godfrey says rewards cards may still offer appeal for people who like to spend up big, and People's Choice Credit Union spokesman Stuart Symons says credit cards can help people with travel perks and managing cash flow.

However, a typical $5000 credit card debt left unpaid wastes more than $75 a month in interest, Symons says.

"Checking your account on your internet banking, app or statement regularly is really important," he says.

"It helps you look for recurring payments you might not realise are going out, or find unusual activity. Fraudulent transactions are on the rise.."

People may find payments they set up before the pandemic are no longer relevant but are still being charged on their card, Symons says.

"What's changed in your life that you might not need anymore?"

Carmen Torraca, 40, uses her credit card for everyday expenses such as fuel and groceries, but is careful to avoid unnecessary charges.

"We pay off our card every month to avoid the interest fees," she says.

"Paying for these family expenses with our card allows us to track our spending more easily as well as gaining us travel points - though who knows when those will be used."


• Remember the interest-free period starts at the beginning of each statement period, not when you make an individual purchase.

• If you only make the minimum repayments each month you'll struggle to pay down your balance.

• Using your credit card to withdraw at ATMs is called a cash advance, slugs you with fees and interest near 29 per cent, and has no interest-free period.

• Only use rewards credit cards if you pay the balance off monthly. Otherwise interest and fees will wipe out any benefit from the rewards.

Originally published as Credit card secrets that can save you cash