Australia’s Debt Addiction: Are We Selling Our Future Short?

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Though credit cards are commonly used for shopping, the survey suggests that more Australians should be comparing and contrasting options.

Roughly 60% of credit card users in Australia have never switched cards, but this could be costing them collectively millions of dollars annually.

Every year, the average Australian loses out on approximately $153 due to excess interest and missed rewards through what is known as ‘credit card loyalty,’ according to consumer comparison site Finder.

Amy Bradney-George, a personal finance expert, says that “Many borrowers don’t realise the potential savings they can get from switching providers.”

Being too loyal means you also miss out on valuable sign-up bonuses and reward offers.Some frequent flyer credit cards offer enough bonus points to fly overseas and they’re typically only available to new cardholders.” She added.

In a survey of 1057 Australians who own credit cards, 55% had never switched cards. That number is estimated to be around six million consumers in total.

Of those surveyed, 35% had switched more than a year ago, and 8% had changed in the past 12 months.

In contrast, the Australian Bureau of Statistics reports an all-time high number of Aussies refinanced their mortgages this year after the RBA raised interest rates six times between early May and November.

Data revealed that over 4000 more people took out mortgages in August than in the same month last year, amounting to 14 billion dollars. This is 20% more mortgagors than last year.

If you’re looking to save money, shopping around for a better deal is key, says Finder. In September of this year alone, the Reserve Bank of Australia estimates that Australians put a record $32.1 billion on credit cards, with the average person racking up nearly $2500 in debt.

According to RBA data, the average credit card interest rate is around 20 percent yearly. However, Finder says many new cards offer a zero percent balance transfer period for up to three years.

If you are carrying a $5000 balance on a regular credit card, you could save more than $2000 in interest by doing a balance transfer to some cards,” said Ms. Bradney-George.

A ‘set-and-forget’ approach to financial products was almost always a bad idea,” she added.

“People who hold onto the same card over a long time are leaving money on the table.

They don’t know how much they can save from comparing other cards on the market.”

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