Cheapest Credit Card award: Best of the Best 2019
GOLD WINNER: G&C MUTUAL (BANK) GOLD WINNER: NEXUS MUTUAL (NON-BANK)
The way we use credit cards is changing. Not only do card issuers now compete with other payment methods, including digital wallets such as Afterpay, but a Reserve Bank of Australia (RBA) report found that homeowners are increasingly using the redraw facilities and offset accounts attached to their home loans to fund larger purchases.
The result is that only 62% of total card debt attracts interest, down from 72% 10 years ago.
The bad news is that RBA found younger and lower-income Australians, especially those who rent rather than own their home, make up the largest share of cardholders who have an outstanding card debt.
If you regularly owe money on your card, it makes good financial sense to look for a credit card with a low rate, and there is tremendous variation in rates across providers. RBA figures show the average rate across all credit cards is a whopping 19.75%. But among low- rate cards this average falls to 13%. As our results show, it is possible to pay considerably less, with all of our winners charging below 10%.
Nexus Mutual romps into first place among the non-banks with a rate of just 6.64%. But there is a catch. Membership of Nexus Mutual is only open to direct employees (and their families) or contractors of the ExxonMobil group.
Northern Inland Credit Union took out the award in 2018, and its Low Rate Visa offers value with the same low purchase rate of 8.99% also applying to cash advances.
Without the option of balance transfers, it could be an ideal first or extra card. The minimum credit limit is $1000.
The American Express Low Rate credit card is available if you earn annual income of $50,000 or more. A balance transfer option is available for up to 70% of your approved credit limit.
Our winner among the banks, G&C Mutual Bank, also took out this award in 2018. The cash advance rate rises to 15.49% and the minimum credit limit is $1,000.
Auswide Bank offers some interesting features with its Low Rate Visa.
The cash advance rate is the same as the purchase rate, and a "rate tracker" feature means the card rate only ever goes up or down with the RBA cash rate. Credit limits start at just $500, and the annual fee is waived if you are aged under 25.