Wednesday, April 8, 2009

Give yourself a rate cut!

If you were paying off this picket fence (well, the house that goes with it), you'd know your mortgage interest rate - and be sweating on every Reserve Bank announcement. Why not take your credit card debt that seriously?

All this hoo-ha about the banks not passing on interest rate cuts to home lenders! What about credit card holders? When was the last time your provider got in touch and said, you know what, we're going to REDUCE your interest - I'd imagine never, not even by the lousy 0.1 per cent some of the banks are planning to pass on from Tuesday's 0.25 per cent Reserve Bank cut.

Most mortgagees can tell you, down to the decimal point, how much interest they're paying on their home loans. They'll tell you when the last rate cut was and when the next one is expected.  Could you say the same about the interest rate on your credit card? Given that interest rates range from around nine per cent to around 20 per cent, it's an important question. 

The banks aren't going to pass on interest rate cuts to you. You need to make like the Reserve Bank and give yourself a rate cut. How? Research whether or not you've got the right card. Chances are that you could be paying less for your credit. Sure, different cards come with different features, but are you using them all, or are you just paying extra for the privilege of having them?

Start by taking a good look at your statements - the last six to 12 months worth - and working out exactly how you're using your card. Then get on to to find the best possible card for your situation - at the lowest possible interest rate. Peter Arnold, a financial analyst with Canstar Cannex, was reported in today's Sun-Herald as saying that there are at least 13 cards right now offering rates below 12 per cent. If you're not paying off your card every month (and therefore paying no interest), you owe it to yourself to get one of those cards working for you. 

It won't take long and it could save you $1000s in interest.

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