Household budgets are feeling the pinch of rising living costs, surging power bills and higher interest rates. It makes now the time to give yourself a credit card rate cut.
A few simple steps can see you save on credit card interest, and it doesn’t have to mean more belt tightening. Here’s what to consider.
Know which type of card user you are.
When it comes to credit cards, it’s all about horses for courses.
We don’t all use our cards in the same way, and having the card that’s best suited to your needs is a starting point to saving on card interest. That means knowing if you’re a ‘revolver’ or a ‘transactor’.
Are you a credit card revolver?
‘Revolvers’ carry an ongoing card balance from month to month. As you’ll pay interest on this balance, it’s a good idea for revolvers to look for a credit card with a low ongoing rate.
Not sure about your card rate? That’s not unusual. Defence Bank research undertaken in 2021 shows that more than one in three cardholders didn't know their credit card interest rate.
Problem is, you could find your card rate is a lot higher than you think. According to Mozo, the average rate in April 2023 is 17.08% . That can add a lot extra onto the cost of card purchases.
The solution is to look for a low rate credit card.
Or are you more of a transactor?
If you pay off your credit card in full each month, give yourself a pat on the back – you’re avoiding card interest charges.
There can still be other costs to watch for though. In particular, it makes sense for transactors to look for a credit card with low annual fees as this is a cost you won’t avoid by keeping a lid on your card’s balance.
The Defence Bank Foundation Credit Card ticks all the boxes.
The Defence Bank Foundation Credit Card is one card that suits both revolvers and transactors.
Revolvers can benefit from an introductory rate on balance transfers and retail purchases that starts low and stays low. Save with a six-month intro rate of just 3.99%, after which the rate sits at a wafer thin 8.99% - one of the lowest rates in the market.
It’s no surprise our Defence Bank Foundation Credit Card is a multi-award winner including taking out Mozo’s Low-Rate Credit Card for two years running – 2021 and 2022. As well as a number of other awards.
The Defence Bank Foundation Credit Card also comes with a low annual fee of $45, making it a money-saving choice for transactors.
Better still, half the annual fee goes to the Defence Bank Foundation which supports veterans and their mental health.
How often should I switch cards?
Shopping around for a better deal on your credit card can make sense. But it’s a good idea to select your card with care rather than continually switching cards in a bid to save.
The Moneysmart website warns that each time you apply for a new credit card or do a balance transfer, it's added to your credit report. If you apply several times in a short period of time, it can harm your credit score.
If you've transferred your balance in the past, Moneysmart says it may be better to try to pay off your credit card than to transfer again. With a low rate plus a low annual fee, a Defence Bank Foundation Credit Card makes it a lot easier to get ahead with an outstanding card balance.
Give yourself savings on credit card interest.
Important note: This information is of a general nature and is not intended to be relied on by you as advice in any particular matter. You should contact us at Defence Bank to discuss how this information may apply to your circumstances.