Credit card costs increase for customers paying with plastic

CREDIT card users, it’s time to pay attention to your statements. Increased fees and less interest-free days are just some of the latest changes to hit customers.

SNEAKY changes to credit card deals — including hiking interest rates and reducing interest-free days — are some of the latest changes to hit customers.

Financial institutions including St George Bank and Bank of Melbourne are increasing interest rates to some of their popular products including the “Vertigo Classic” credit card — the purchase rate will jump from 13.24 per cent to 13.74 per cent from April.

Watch out for changes to you credit card deals.

On the average card debt of $4073, this increase means cardholders will pay an extra $348 in interest and increase the time to pay off the debt by eight months if they make the minimum repayments.

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And for Coles credit card customers with a low rate Mastercard, low rate platinum Mastercard or no annual fee Mastercard their interest-free periods will be wound back from 62 to 55 days from March 5.

This means customers have one week less to pay back their debt in full without incurring hefty interest charges.

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Financial comparison website Ratecity’s spokeswoman Sally Tindall said customers have been slugged with all sorts of changes to their cards and they need to pay attention.

RateCity spokeswoman Sally Tindall says consumers should regularly give themselves a credit card health check.

“Rate hikes, changes to the interest-free changes and annual fee changes means consumers should regular health check your credit card,’’ she said.

“Sometimes you may miss the notification from your lender so it’s a good idea at least once a year or every six months check your interest rate, interest-free days and the annual fee, they are the biggest places they can sting you.”

The Reserve Bank of Australia board today meets for the first time in 2018 and it’s expected they will keep the cash rate on hold at a record low of 1.5 per cent.

Despite no cash rate change since 2016, card deals continue to fluctuate which means customers need to constantly review their deals.

Australians owe more than $52.2 billion on credit cards.

Credit cards are expected to come under intense scrutiny in the upcoming banking royal commission.

The RBA last year introduced interchange fee regulations which capped Visa and Mastercard credit cards at 0.8 per cent — reducing them from around 1.5 to 1.7 per cent.

This has resulted in customers being hit with higher charges to help boost revenue.

Marketplace lender DirectMoney’s chief executive officer Anthony Nantes said “credit cards are great for convenience” but they come at a big cost.

“Credit cards are structured to give you that honeymoon period early on where you can guilt-free shop but later down the track you end up paying significant amounts of interest,’’ he said.

Interest rates on credit cards are often around 20 per cent.

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@sophieelsworth