If you have a credit card then you probably know that the interest rates are incredibly high. You might have gotten a credit card or two for those “just-in-case” purchases but if you have ever missed a payment then you know why credit card companies are so rich. With rates that go up to 26% on purchases and almost 30% for cash advances, credit card companies only need some of their customers to miss a few payments to turn a profit. The Reserve Bank of Australia has set the cash rate at a record low to 2% but credit card companies have not followed the dropping rates. Credit card interest rates have continued to stay so high that if a customer falls behind on a payment they are likely to find themselves swimming in credit card debt.
High Credit Card Debt
Credit card debt can quickly build up and compounding late fees coupled with high interest rates have crippled many people’s finances. Studies show that one in five Australians are still paying interest on credit card debt. Credit card debt is one of the main reasons people seek financial counselling services. If you are one of the millions of Australians that have found themselves with mounting credit card debt then you should immediately take action to take control of your financial future.
However, if you are looking for a credit card then you should shop around and find the best deal instead of taking the first offer of a credit card from your bank. Seek out a credit card with a low interest rate and be aware of how the interest rates work. If you have a credit card with a no interest period, then be cautious of how long that period is. If your credit card is an awards card then you should calculate the cost and see if it is really worth the benefits.
Some cards have surcharges for some purchases or charge higher rates for cash advances so keep that in mind. If you plan on travelling overseas, be sure to check if your credit card incurs extra costs for overseas transactions and currency conversion. If you are transferring a balance from one card to another, then be careful about the charges on the remaining balance after the grace period. The ultimate goal is to get rid of all of your credit card debt and not depend on credit cards. If you are having trouble leaving your credit card debt behind you, then contact a debt settlement professional.