Credit Card Comparison – Compare Credit Cards & Apply Online

Compare Australian credit card offers and find the right credit card for you

When choosing the right credit card for yourself, there are a number of things to keep in mind. Most importantly, you should do a comprehensive credit card comparison before making a decision to apply for a credit card. In particular, you should consider how banks apply interest and charge for late payments. Read on to learn which banks are considered to charge fairly, and which banks over-charge.

Featured Balance Transfer Credit Cards:

		Interest Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual Fee	Cash Advance Rate (p.a.)
ANZ Platinum Credit Card	An introductory low interest rate offer in balance transfers and purchases. Plus no annual fee for the first year.	0% for 6 months (reverts to 19.24%)	0% for 6 months	$0 annual fee for the first year( $87 thereafter)	20.99%
St George Vertigo	Optimise your purchase power with St George Vertigo Mastercard. Its low variable purchase rates allows you to enjoy shopping without hurting your pocket. You can also enjoy interest free days of up to 55days.	13.24%	0.99% for 12 months	$55	21.49%
Bank of Melbourne Vertigo Credit Card	A low annual fee credit card with a low interest rates on balance transfers and purchases.	13.24%	0.99% for 12 months	$55	21.49%
Citibank Clear Platinum Card	Get a start with an introductory offer on purchases and balance transfers for 12 months.	11.99%	2.9% for 12 months	$99	21.74%
HSBC Credit Card	Reduce your credit card debt with a low balance transfers for 6 months plus a $0 annual fee.	17.99%	0% for 6 months with 2% handling fee	$0	21.99%

Featured 0% p.a. for 6 months Balance Transfer Credit Cards:

		Interest Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual Fee	Cash Advance Rate (p.a.)
HSBC Credit Card	A no annual fee card from HSBC with a low rate balance transfer offer.	17.99%	0% for 6 months with 2% handling fee	$0	21.99%
ANZ Platinum Credit Card	A low interest rate offer on both balance transfers and purchases with a $0 annual fee for the first year.	0% for 6 months (reverts to 19.24%)	0% for 6 months	$0 annual fee for the first year( $87 thereafter)	20.99%
Citibank BP Credit Card	One of the market’s leading low rate options with an exclusive Cashback offer.	20.89%	0% for 6 months	$89	21.39%
HSBC Platinum Credit Card	Save with a low balance transfer offer and a low annual fee	19.99%	0% for 6 months with 2% handling fee	$129	21.99%
Westpac Earth Classic	Earn up to 1 Qantas Frequent Flyer points per $1 spent. Comes with a low balance transfer offer for 6 months.	19.99%	0.99% for 6 months	$75	21.49%
Westpac Low Rate Card	A simple low interest rate credit card with a low balance transfer offer for the first 6 months.	0% for 6 months (reverts to 13.49%)	0% for 6 months	$45	21.49%
ANZ Low Rate MasterCard – Balance Transfer	Offering a low balance transfer and on-going purchase rate with a low annual fee.	0% for 3 months (reverts to 13.24%)	0% for 3 months	$58	21.49%

Featured 9 to 12 Month Balance Transfer Credit Cards:

		Interest Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual Fee	Cash Advance Rate (p.a.)
Bank of Melbourne Vertigo Credit Card	Enjoy this great introductory offer from Bank of Melbourne. Limited time offer.	13.24%	0.99% for 12 months	$55	21.49%
Citibank ReadyCredit	A low balance transfer rate, plus a low interest rate on purchases months with No annual fee.	18.99%	2.9% for 15 months	$0	18.99%
NAB Gold Card	Benefit from gold credit card advantages including travel insurance, higher credit limits and VIP Lost card cover.	19.74%	1% for 12 months	$90	21.74%
Bankwest Breeze MasterCard	Save with a low ongoing rate on purchases, 55 days interest free and a low annual fee.	10.99%	4.99% for 12 months	$69	21.99%
Citibank Rewards Credit Card – Platinum Card	A low, long balance transfer offer plus enjoy an ongoing earn rate of 1.25 points per $1 spent on domestic purchases and 3 points per $1 spent on international purchases.	20.99%	0.9% for 9 months	$199	21.74%
Virgin Flyer Credit Card	An impressive balance transfer rate plus earn 1 Velocity Point per $1 spend up to $1,500 per month on every retail purchase on your VISA Card.	20.99%	1.9% for 9 months	$99	20.99%
Bankwest Zero MasterCard	A great $0 annual fee credit card, with great introductory offer.	1% for 6 months (reverts to 17.99%)	4.99% for 12 months	$0	18.99%

If you are interested in obtaining the best credit card for yourself, you will probably know that there are a number of factors to consider – the annual fee, the presence of a rewards program, the number of interest free days and the interest rate and maybe a few other factors. One thing that is less obvious, and should definitely be taken into consideration when choosing a credit card, is the way in which the card provider applies penalty fees. Even though none of us sets out with the intention to incur penalty fees such as late fees and other penalties, it is only human to err, and with so much going on in our lives, it is only natural to slip up a time or two.

The truth is that most Australians try to pay their credit card bill in full each month in order to avoid interest rates and other charges. However, the one time that you miss a payment, you can be hit with some severe penalty fees.

Penalty fees

Who has not at one time or another missed their credit card due date? Maybe you misread a statement, or maybe you had an illness or other emergency on the due date, or maybe you misread the statement amount. Whatever the reason, if you somehow miss a due date, you will incur a hefty penalty fee. It is not just the interest rate on the card that determines how much you’ll have to pay in fees, it’s also the manner in which your card provider calculates that interest – when the interest starts and how fairly they apply interest-free periods. Credit card comparison is more than just looking at the absolute interest rates. Depending on your spending and repayment patterns, the way the penalty fees are calculated might differ.

Credit card providers compared

Choice Magazine recently surveyed more than 20 credit card providers to compare how the providers apply interest fees and other fees for customers who occasionally miss their credit card due date. All the major financial institutions, as well as a few smaller institutions, provided full information, which was used to calculate the fees and compare providers.

The credit card providers tested include:

• Australian Central Credit Union
• American Express
• ANZ
• Bank of Queensland
• Bankwest
• Bendigo Bank
• Citibank
• Commonwealth Bank
• CUA
• GE Money (Myer Visa and Low Rate MasterCard)
• Heritage Building Society
• HSBC Australia
• IMB
• Macquarie Bank
• Members Equity
• NAB
• Savings & Loans Credit Union
• St George Bank
• Suncorp Metway
• Teachers Credit Union
• Westpac

Case Study

The comparison of different credit card providers is based on the results for a (hypothetical) consumer named “Joe”. Joe tries to pay his bills in full every month, but misses the due date one month. These are his transactions:

• Statement on 1 October – Joe owes nothing
• On 18 October Joe spends $1300 (this $1300 figure is the average monthly credit card spending of an Australian consumer)
• Statement on 1 November – indicates $1300 owing
• 8 November – another purchase of $1300
• 15 November, due date for statement received on 1 November – Joe pays $800
• Statement on 1 December – shows the two purchases and any relevant interest charges and fees.
• The full statement amount is repaid on the due date.

In order to make an apples-to-apples credit card comparison, it has been assumed that all credit cards charge the same interest rate, i.e. the average rate for cards with interest free days, which is 16% p.a. This comparison is illustrated in Table 1:

Table 1: Credit card interest calculations for Joe*
Provider (listed in order of fairness, alphabetical where equal)	Interest paid ($, rounded to nearest ten cents)*
Bendigo Bank	9.90
Heritage Building Society	12.30
Teachers Credit Union	12.30
GE Money Myer Visa	22.50
Westpac	28.50
IMB	39.30
Savings & Loans Credit Union	40.60
GE Money Low Rate MasterCard	43.50
NAB	43.80
Australian Central Credit Union	43.80
ANZ	43.80
Bank of Queensland	43.80
Bankwest	43.80
HSBC Australia	43.80
Macquarie Bank	43.80
Suncorp Metway	43.80
CUA	43.80
Commonwealth Bank	43.80
Citibank	43.80
St George Bank	43.80
ME Bank	44.00
American Express	45.00

Unlike Table 1, in Table 2 we apply the real interest rate charged by the credit card providers:

As you can see, the total fees charges varies wildly according to who the credit card provider is.

Companies who use unfair practices charge Joe $40 – $45 interest for this late repayment. These card issuers include American Express, ANZ, NAB, Savings & Loans Credit Union, Citibank, Commonwealth Bank, Bank of Queensland, Bankwest, CUA, GE Money’s Low Rate MasterCard, HSBC Australia, IMB, Macquarie Bank, ME Bank, and St George.

The fair providers only charge Joe $10 – $12 interest – this is about 80% less than the other companies. These banks include Bendigo Bank, Heritage Building Society and Teachers Credit Union.

Unfair tactics to be aware of

The following are a number of unfair tactics used by the banks to charge higher fees and charges. Beware of these as you conduct your credit card comparison.

Tactic 1 – backdated interest

By far, this is the most common unfair practice used by the credit card issuers.

Many credit cards come with interest free days. This means that if you spend during March, you receive your card statement on April 1 and are required to pay your bill on April 15. If there is no interest charged on your purchases till after the due date, then these days, till April 15, are your interest free days. Effectively, in this scenario, you can enjoy up to 45 days interest free. Most Australian credit cards offer up to 55 days interest free.

However, if you miss your payment date, banks will charge you interest all the way back from the date you made your purchase. This is known as backdating your interest charges. Because of this, a small error on the customer’s part can have a disproportionate effect. If you miss the payment date by one day on a 55-days interest free card, for instance, you will be charged interest for 56 days.

Almost all the large companies operate in this way by backdating their interest charges. Bendigo Bank and Westpac are, however, much more fair, and only charge interest starting from the date on which the statement was sent out rather than the date of purchase.

Here are a few effects that customers have experienced due to this practice of backdating interest charges:

• One customer keyed in the wrong payment amount by $1 and was charged interest fees of nearly $10.
• One customer paid 80% of her bill before the due date. On the date payment was due, she had Internet problems and was 1 day late with paying the remaining 20%. She was charged interest on all her purchases, not just the amount owing.
• Another customer in the Choice survey paid the bill a few days late and is quoted as saying: “not only was I charged interest for those couple of days, but from that date onwards on all my other purchases until the following statement date, when I paid the full balance. I believe I was also charged backdated interest for the previous purchases.

Tactic 2 – partial repayments not considered

Another unfair tactic practiced by credit card issuers is the ignoring of partial repayments. This means that if you pay part of your bill on time, most institutions will not give you credit for that repayment and will continue to backdate interest on the total amount of all your purchases. So for example, if your bill was $2000 and you repaid $1900 on time, most companies will charge interest on the entire balance of $2000, backdated by 55 days (if you enjoy 55 days interest free period). The exceptions to this are Bendigo Bank, Heritage Building Society and Teachers Credit Union.

Tactic 3 – cancellation of interest-free period

If you fail to pay your entire bill on time, most card providers will cancel your interest free period. This means that you will be charged interest instantly on any new purchases you make, before repaying your full credit card bill.

Again, Bendigo Bank, Heritage Building Society and Teachers Credit Union are the exceptions to this practice. All of them will honour the interest-free period even if you have not repaid your entire balance from the previous month.

How to select the right credit card

When you are comparing credit cards, you need to consider more than just the type of card, the interest rates and the rewards programme.

If you always pay your bills on time, these are the factors to consider:

• Annual fees – annual fees on credit cards can add up, so you might want to consider saving money by obtaining a card with no annual fees.
• Number of interest-free days: You can maximize your cash flow situation by obtaining a card with a greater number of interest free days.
• Overseas transaction fees: Consider the overseas transaction fees if you travel frequently, or purchase goods online in a different currency.
• Rewards program - You might want to consider a rewards programme. However in order to justify the higher annual fees, you will need to spend at least $2000 per month using your credit card.

If you occasionally miss the payment date and pay late or not in full, there are a few other factors you should keep in mind. In particular, you should consider how the interest will be applied if you pay late or make an incomplete repayment.

If you never pay your bill on time, you should consider a balance transfer to a low-interest card. The balance transfer period will give you some time to breathe, and get your finances in order so that you can repay your entire balance.

While you organize your finances, you could consider switching to a debit card or EFTPOS card instead. You should also read a few tips about how to control your credit card spending.

Changed practices – HSBC and Bank of Queensland

Among the banks surveyed by Choice Magazine, the sad thing to see is that HSBC and Bank of Queensland have changed their credit card practices for the worse. Both banks used to practice more fair behaviour towards customers, but now both are among the unfair banks. They both charge interest rates and fees in an unfair manner. The credit card division of Bank of Queensland was recently sold to Citigroup, which may explain its changed practices in part.

When Choice Magazine contacted an HSBC representative to discuss their changes in practices, the HSBC spokesman said: “The change was introduced late in 2007 as a result of technology and systems changes. It also brought us into line with industry, so consumers could compare our cards apples-for-apples with other products in the market.”

The spokesman is also quoted as saying that current practices “are fair and reasonable and are in line with our regulatory requirements, market practice and consistent with the approach taken by a number of our Australian competitors.”

A Bank of Queensland representative was also contacted regarding BoQ’s changed practices. The representative is quoted as saying: “We give customers an interest-free period every month, while others don’t. All card providers charged interest in this way until a few years ago, when they all changed [their methods] to get more income. We think our method is a bit fairer – we don’t penalise customers.”

When speaking to Choice Magazine, a BoQ spokesperson said: “Products inevitably change over time and this interest-free feature has changed in the three years since the last review, as is common in any industry. If any customer doesn’t believe the card they currently have best meets their needs, we would encourage them to drop in to one of our branches where we would be happy to find the most suitable product.”

As you can see, banks do change their practices, so it’s important to keep an eye out to check whether your credit card provider is charging you in a fair manner.

Posted on Friday, May 28th, 2010 at 5:18 pm

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