powering smart financial decisions

How capping credit card interest rates could save Australians $1.53 billion a year

How capping credit card interest rates could save Australians $1.53 billion a year

Australia’s credit card debt has risen to a total of $20.03 billion dollars, according to new RBA statistics out today.

In February, $18.4 million dollars was added to debt accruing interest, a 0.1 per cent rise from the month before in original terms.

It comes as there are growing calls for the federal government to regulate credit card interest rates so there’s a maximum margin with the RBA cash rate, which is 0.10 per cent.

By comparison, the average credit card interest rate is currently 17.3 per cent, according to the RBA.

Analysis by RateCity.com.au shows if the average credit card rate was 10 per cent instead, Australia’s interest bill for the month of February would have been $122 million less.

Over the last year the interest bill would have been slashed by $1.53 billion dollars.

Australia’s credit card debt: Impact of lower interest rates

Total interest bill – monthly Total interest bill – annual
RBA average rate (around 17%)

$289 million

$3.71 billion

If credit card rates were 10%

$167 million

$2.18 billion


$122 million

$1.53 billion

Source: RateCity.com.au.

Note: Calculations based on the average RBA credit card rates from March 2020 to Feb 2021, and the debt accruing interest each month.

Credit card debt up in February – but down year-on-year

While debt accruing interest rose month-on-month, compared to February last year, the country’s overall credit bill dropped by $7.17 billion.

There are also 1.05 million fewer credit card accounts compared to a year ago - an 8 per cent drop.

Credit card statistics: monthly and year-on-year changes

Feb-2021Monthly change

Jan vs Feb 2021

Annual change

Feb 2020 vs Feb 2021

No. of credit card accounts


Lowest since June 2007



Balances accruing interest

$20.03 billion

$18.4 million

-$7.17 billion

Value of transactions

$19.72 billion

$441.2 million

-$1.4 billion

Source: RBA, released 7 April 2021, original data, excludes commercial cards.

RateCity.com.au research director, Sally Tindall, said: “It’s appalling to see some credit card companies still charging customers over 20 per cent interest, when the cash rate is 0.10 per cent.

“If you’re paying a double-digit interest rate on your credit card every month you’re being fleeced,” she said.

“If some credit card companies continue to hoodwink customers into paying exorbitant rates, perhaps more regulation is needed to better protect people.

“Credit card debt is riskier debt, so it’s appropriate for banks to charge higher interest rates than they would for a home loan. However, in this current market it’s impossible to justify rates over 20 per cent.

“While some credit cards rates are still stubbornly high, it’s encouraging to see the list cards with rates under 10 per cent growing,” she said.

Analysis of the RateCity.com.au database shows there are 19 providers offering credit cards with rates under 10 per cent, the highest on our records.

“Even the big players like CBA, Westpac and American Express have low rate, fee options on the table.

“While the number of credit card accounts continues to tumble, the slight rise in debt accruing interest is a troubling sign that some Australians are slipping back into bad habits,” she said.

Credit Cards on RateCity.com.au with interest rates under 10%

ProviderCard nameInterest Rate Annual Fee
NABStraightUp0%$0- $240
CBANeo0%$0- $264
G&C Mutual BankLow Rate Visa Credit Card7.49%$50
Auswide BankLow Rate Visa Card8.05%$50
American ExpressLow Rate Credit Card8.99%$0
Community First Credit UnionLow Rate Credit Card8.99%$40
Community First Credit UnionLow Rate Pink Visa Card8.99%$40
Easy Street Financial ServicesEasy Low Rate Visa Credit Card8.99%$40
MOVE BankLow Rate Credit Card8.99%$59
Community First Credit UnionLow Rate Blue Visa Card8.99%$40
Defence BankFoundation Visa Card8.99%$45
Bank AustraliaLow Rate Visa Credit Card9.39%$59
Bank FirstVisa Platinum Credit Card9.59%$99
WestpacLite Card9.90%$108
Australian UnityLow Rate Visa Credit Card9.90%$59
Greater BankVisa Credit Card9.95%$49
Bank of usVisa Credit Card9.99%$39
First Option Bank LtdLow Rate Visa Credit Card9.99%$48
Source: RateCity.com.au

NAB StraightUp: Monthly fee of $10-$20 charged if you use your card and there is a balance owing

CBA Neo: Monthly fee of $12-$22 charged if you use your card and there is a balance owing

Did you find this helpful? Why not share this news?

This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.



Money Health Newsletter

Subscribe for news, tips and expert opinions to help you make smarter financial decisions

By signing up, you agree to the RateCity Privacy Policy, Terms of Use and Disclaimer.


Learn more about credit cards

Should I get a credit card?

Once you've compared credit card interest rates and deals and found the right card for you, the actual process of getting a credit card is quite straightforward. You can apply for a credit card online, over the phone or in person at a bank branch. 

How is credit card interest charged?

Your credit card will be charged interest when you don’t pay off the balance on your credit card. Your card provider or bank charges you the individual interest rate that is associated with your card, which is usually between 10 and 20 per cent. 

The interest will be added onto your bill each month or billing period if you don’t pay off the balance, unless you are in an interest-free period.

You will be charged interest on anything that hasn’t been paid for inside the interest-free period. Usually you will receive a notice on your bill or statement saying you will be charged interest so you have some form of notice before you’re charged.

How to calculate credit card interest

Credit card interest can quickly turn a manageable balance into unmovable debt. So being able to understand how interest rates translate into dollars is an important skill to acquire.

The common mistake people make is focusing on the credit card’s annual percentage rate (APR), which often sits between 15 and 20 per cent. While the APR does provide a rough idea of how much interest you’ll pay, it’s not entirely accurate.

This is because you actually accrue interest on your balance daily, not annually. So, you need to work out your daily periodic rate (DPR). To do this, divide your card’s APR by the number of days in a year (e.g. 16.9 per cent divided by 365, or 0.05 per cent). You can then apply this figure to the daily balance on your credit card.

What is a balance transfer credit card?

A balance transfer credit card lets you transfer your debt balance from one credit card to another. A balance transfer credit card generally has a 0 per cent interest rate for a set period of time. When you roll your debt balance over to a new credit card, you’ll be able to take advantage of the interest-free period to pay your credit card debt off faster without accruing additional interest charges. If your application is approved, the provider will pay out your old credit card and transfer your debt balance over to the new card. 

Which credit card has the highest annual percentage rate?

The credit card market changes all the time, so the credit card with the highest annual percentage rate is also liable to change.

Keep in mind that credit card interest rates are expressed as a yearly rate, or annual percentage rate (APR). A low APR is generally good but also consider:

  • There can be different APR's for each feature of the card (e.g. purchases may have an APR of 14 per cent, while cash advances on same card could have an APR of 17 per cent.
  • Credit cards with a variable rate can change throughout the year, affecting your APR, so check the full details.
  • If you pay your balance in full every month, having the lowest APR is not as important as the other fees associated with the card. However, if you carry a balance from month to month, then you want the lowest APR possible.

Can a pensioner get a credit card?

It is possible to get a credit card as a pensioner. There are some factors to keep in mind, including:

  • Annual income. Look for credit cards with minimum annual income requirements you can meet. 
  • Annual fees. If high fees are a concern for you, opt for a card with a low or $0 annual fee. 
  • Interest rate. Make sure you won’t have any nasty surprises on your credit card bill. Compare cards with a low interest rates to minimise risk.

What should you do when you lose your credit card?

Losing your credit card is a serious situation, and could land you in financial trouble. Here is a simple guide detailing what to do when you lose your credit card.

Lock you card – Contact your provider and inform them about your lost credit card. From here lock, block or cancel your card.

Keep track of transactions – Look out for unauthorised credit card transactions. Most banks protect against fraudulent transactions.

Address recurring charges – If your card is linked to recurring charges (gym membership, rent, utilities), contact those businesses.

Check credit rate – To ensure you’re not the victim of identity theft, check your credit rating a month or two after you lose your credit card.

What should I do if my ANZ credit card has expired?

Your ANZ credit card is considered expired only after the last day of the month and year marked on your card. For instance, if your card’s expiry date reads 03/22, it is valid until 31 March 2022 and expires on 1 April 2022. Typically, you should have received a new credit card by that date, and you won’t have to request a new card. 

Once you get the new card, you should remember to switch any automatic payments you have - such as a utility or mobile phone bill - from your expired credit card to your new credit card. Equally, if you are using CardPay Direct to repay your ANZ credit card debt, you may need to update the credit card account details for that service as well. 

In case the new card doesn’t arrive by the expiry date of your current credit card, you can call ANZ on 13 22 73 to find out the reason and if you need to request an expedited card. Please note that if you were planning to close your credit card account or request a credit card upgrade, you may need to call ANZ at least before the 25th of the month your current credit card expires in, as that’s when they may send you the new credit card.

How do you use credit cards?

A credit card can be an easy way to make purchases online, in person or over the phone. When used properly, a credit card can even help you manage your cash flow. But before applying for a credit card, it’s good to know how they work. A credit card is essentially a personal line of credit which lets you buy things and pay for them later. As a card holder, you’ll be given a credit limit and (potentially) charged interest on the money the bank lends you. At the end of each billing period, the bank will send you a statement which shows your outstanding balance and the minimum amount you need to pay back. If you don’t pay back the full balance amount, the bank will begin charging you interest.

What should you do if your credit card is compromised?

Credit card fraud is a serious problem. If your credit card is compromised and you’re wondering what to do, here are a few precautionary steps to take.

Contact you credit provider – Get in touch will your credit card provider. If you feel your card has been compromised, you should be able to lock or block it.

Monitor your accounts – Keep an eye on your credit card accounts. Any unauthorised transactions could be a sign your credit card has been compromised.

Check your credit rating – It’s also important to check your credit rating, to ensure you’re not a victim of identity theft or some other financial mischief.

How do you apply for a credit card?

You can apply for a credit card online, over the phone or in person at the bank. Once you’ve compared the current credit card offers, the application process is quick and easy. Before you get your application started, you’ll need to gather your personal information like proof of ID, payslips and bank statements, proof of employment and details of your income, assets and liabilities. To be eligible for a credit card, you’ll need to be an Australian citizen over 18 and earn a minimum of $15,000 each year. Once you’ve applied for a credit card, you should get a response fairly instantly. If your credit card application has been approved, you should receive a welcome pack with your new credit card within 10-15 days.

How do you use a credit card?

Credit cards are a quick and convenient way to pay for items in store, online or over the phone. You can use a credit card as a cashless way to pay for goods or services, both locally and overseas. You can also use a credit card to make a cash advance, which gives you the flexibility to withdraw cash from your credit card account. Because a credit card uses the bank’s funds instead of your own, you will be charged interest on the money you spend – unless you pay off the entire debt within the interest-free period. If you pay the minimum monthly repayment, you will be charged interest. There are many different credit card options on the market, all offering different interest rates and reward options.

How easy is it to get a credit card?

For most Australians, there are no great barriers to applying for and getting approved for a credit card. Here are some points that a lender will consider when assessing your credit card application.

Credit score: A bad credit score is not the be all and end all of your application, but it may stop you being approved for a higher credit limit. If your credit score is less than perfect, apply for the credit limit that you need, rather than the one you want.

Annual income: Most credit cards have minimum annual income requirements. Make sure you’re applying for a card where you meet the minimum.

Age & residency: You need to be at least 18 years old to apply for a credit card in Australia, and most require that you are an Australian citizen or permanent resident. However, there are some credit cards available to temporary residents.

Can I transfer money from my American Express credit card to my bank account?

If you’re an American Express credit card customer, you may not be able to transfer money from your credit card to your bank account. However, you may be eligible for cash advances, which involves withdrawing money through an ATM. 

To qualify for a cash advance, you’ll likely have to enrol for American Express Membership Rewards. Consider checking your online credit card account to see if you can withdraw a cash advance and, if so, the fees and charges you’ll incur for this transaction. 

You should remember that cash advances are different from balance transfers, which were available with some American Express credit cards earlier. Balance transfers allow customers to consolidate debt from high-interest credit cards to a credit card offering a lower interest rate. If you only recently applied for an American Express credit card, balance transfers may not be available irrespective of the card you own.