Low interest credit cards compared

With Australians owing around $37 billion on 13 million credit cards, lots of people are looking to consolidate their personal debts. In recent years a new product has become an increasingly popular tool to do this: the low-rate credit card.

There are two main types of low rate credit card, both offering different benefits to consumers. These are:

• the ongoing low-rate card – these credit cards offer a permanently low interest rate on purchases for the life of the card. The downside of this type of card is that it often comes with quite hefty additional costs such as, cash advance, ATM withdrawal, additional card, application and annual fees.
• the low introductory rate card – many providers are now offering low or zero interest rates on balance transfers. These can be valid for the life of the transfer or for a set period, often six months, after which the interest rate on all transferred funds will revert back to the standard interest rate.

Some cards offer a mixture of both schemes by having a zero introductory rate for balance transfers and a relatively low ongoing rate.

Some low-rate cards also offer member benefits and partner discounts which can be worth considering. A limited number of low-rate credit cards also offer attractive interest rates on cash advances, a feature missing on most traditional credit cards. However, some low-rate cards do not offer interest-free days on purchases.

The benefits of rolling over

As long as you do your homework and research all the options available, there can be many benefits to rolling over your existing credit card debt to a new, low-rate credit card.

If you can manage to pay your debt off within the introductory period, you can save a lot of money. The difference between interest charged at a rate of 16% and interest charged at 0% for six months can be substantial.

Alternatively, balance transfers to zero-rate cards can give you a period of relief from your ongoing debt. Not having to find a minimum repayment each month for six months can assist some people to consolidate their finances.

You can also benefit from having all your credit card debts in one place. One debt means just one payable amount each month, instead of the three or four you may have had with your existing cards. The more repayments required each month, the more opportunity there is to forget to make one, resulting in hefty late fees.

What low-rate cards are available

The following information is current as at September 2006 and is intended as a guide only. For more up to date and detailed information compare credit cards with our product finder.

• 10.99% on purchases with a six month balance transfer rate of 0%
• Cash advance rate 17.24%
• $49 annual fee
• 55 days interest free
• No cost additional cards.

St George Vertigo MasterCard

• 8.99% interest rate with six month balance transfer rate of 0%
• Cash advance rate 18.99%
• $45 annual fee
• 55 days interest free
• Complimentary additional card and partner discounts.

• Low 12.65% on purchases and cash advances
• 0% balance transfers for six months
• No annual fee
• 55 days interest free
• Partner discounts.

• 9.90% on purchases and cash advances
• 0% balance transfers for six months
• $65 annual fee
• 55 days interest free.

• 10.49% on purchases with 0% balance transfer rate over six months
• 15.49% cash advance rate
• $0 annual fee for first year
• 55 days interest free.

St George Starts Low Stays Low Credit Card

• Low 11.75% on purchases and cash advances
• Partner discounts
• 55 days interest free
• $59 annual fee
• No charge additional cards.

• 12.24% on purchases and cash advances
• 0% balance transfers for six months
• $58 annual fee
• 55 days interest free.

Westpac Low-Rate Credit Card

• 11.25% on purchases with balance transfer of 3.99% over six months
• 16.99% cash advance
• $45 annual fee
• 55 days interest free
• No charge additional cards.

Earth

• 12.74% on purchases with balance transfer of 0.99% over six months
• 18.24% cash advance
• $49 annual fee
• Rewards program
• 55 days interest free.

Citibank ReadyCredit

• 12.99% on purchases and cash advances
• No annual fee, ATM, EFTPOS or cash advance fee
• Cheque book included.

Wizard Clear Advantage Credit Card

• 12.40% on purchases and cash advances
• No annual fee, ATM, cash advance or overseas transaction fees
• 0% balance transfer over six months
• 55 days interest free.