Plastic pitfalls: Australians paying $1.3 billion credit card loyalty tax

Australians are losing billions of dollars by sticking with the same credit card provider, according to new research by Finder.

Finder analysis shows the average credit card holder carrying a balance could save $222 (over 32 months) by switching cards – that's $1.3 billion nationwide.

There are over 13 million credit cards in circulation in Australia, with 44% accruing interest.

At the average 14.2% interest rate, according to Finder's Consumer Sentiment Tracker, those carrying a balance have an average of $1,345 accruing interest, according to the latest RBA figures.

With a 0% balance transfer, the average debtor could save as much as $222 over 32 months.

Amy Bradney-George, credit card expert at Finder, said many people were missing out on a better deal.

"Australians are feeling the pinch with the cost of almost everything on the rise.

"Credit cards are often one of those things we 'set and forget' – and it's costing us.

"Credit card interest rates range from around 8% to 27% which means some people could be charged a lot more for a very small balance.

"On the flipside, if you always pay off your card and want to be rewarded, there are introductory offers that can give you hundreds of dollars of value when you get a new card – but the cost of annual fees can add up if you're not careful."

Bradney-George said credit cards can offer a range of advantages as long as they are used responsibility.

"Credit cards can be a great tool for earning rewards such as frequent flyer points and for building your credit history.

"But if you rely too heavily on credit, you could find yourself in a debt spiral that takes months or even years to get out of.

"Make sure you're only spending what you can comfortably afford to pay off in full each month."

To help Australians make smarter financial decisions while still enjoying the perks of credit cards, Finder has today announced the winners of its Credit Card Awards 2024.

Using 12 months of market data and a robust methodology, Finder's experts analysed the rates, fees, rewards and offer details for every credit card in our database.

Bradney-George said the award winners give Australians a benchmark for when they want to compare and find a new card.

"We've done the hard yards so you don't have to. Our experts analysed 270 cards from 82 banks and brands to determine the winners and finalists for 2024.

"With credit cards from both major lenders and smaller banks or credit unions in the mix, these awards are another example of why it pays to shop around – because you don't know where you'll get the most value until you see what's out there ."

The Virgin Australia Velocity Flyer Card was awarded Best Balance Transfer Credit Card for its consistently competitive offer during the period of analysis. This included a 0% balance transfer interest rate for 24 months, with no balance transfer fee and no annual fee in the first year (then $129 per year).

For Aussies looking to get their frequent flyer fix, the ANZ Frequent Flyer Black won Best Frequent Flyer Credit Card – Qantas, while Virgin Australia's Velocity High Flyer Card won Best Frequent Flyer Credit Card – Velocity.

The Bankwest Zero Platinum Mastercard took the top spot for Best Travel Credit Card, while the ANZ Rewards Black Credit Card was awarded Best Rewards Credit Card.

American Express won 3 categories – with the American Express Low Rate Credit Card winning the Best No Annual Fee category. The American Express Essential Credit Card won the top gong for Best No Annual Fee Rewards Credit Card and the American Express Platinum Business Card was awarded Best Business Charge Card.

For those looking to score bonus reward points, the ANZ Rewards Black Credit Card won Best Rewards Credit Card.

Illawarra Credit Union Low Rate credit card was awarded Best Low Rate Credit Card.