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Australian consumers have failed to see declines in credit card interest rates because most financial institutions are focusing on decreasing rates on mortgages and other personal-banking products, an analyst tells CardLine Global. The Australian government is encouraging banks to decrease credit card interest rates in the face of the global economic crisis, says Peter Arnold, a financial analyst with Brisbane-based research firm Cannex Pty Ltd. "Conversely, cardholders should ensure they have the right card for their needs and pay off more than the minimum required repayments each month," he says. Australia had 14.2 million credit and charge cards in circulation as of the end of August with AU$32 billion (US$21.4 billion or 16.7 billion euros) in credit card debt accruing interest each month, according to the latest figures from the Reserve Bank of Australia. "There are two main issues people face with credit card debt: using the wrong card and low minimum repayments," Arnold says. "If people are revolving debt and have a high-rate, fully featured card, they should switch to a low-rate, no frills card to minimize the interest payments." Arnold warns that consumers should avoid paying the minimum payment if possible. "Often this will barely cover the interest charge, and sometimes it will not even cover the interest. In turn, the outstanding balance will increase even without any purchases," he adds.
