August 03, 2015
Credit cards have come a long way since they were first introduced in Australia in the 1970's - who remembers their first "Bankcard"?
While the benefits of having a credit card are many and varied, there are also some pitfalls to consider. For those who aren't diligent and don't pay their bill off in full each month, credit cards can become a money trap.
For example, say you currently owe $5,000 on your credit card which has an interest rate of 14%p.a. If you didn't charge anything else to the card and made minimum repayments each month, it would take you 21 years and 11 months to pay off your credit card balance. Worse still, you would have spent almost $11,000 paying off a $5,000 debt.
If Mortgage Choice's latest Money Survey is anything to go by, there may be a lot of Australians who find themselves in this predicament. According to the survey, 57.5% of Australias have some sort of credit card debt that is not fully paid prior to due date.
Of those with debt, 35.4% of respondents admitted to owing over $5,000, while just 11% indicated that they had less than $500 worth of credit card debt.