Are you holding the right credit card?

By Cameron Micallef

May 05 2020
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Australians are relying on credit more than ever, but most have chosen the wrong card for their personal situation, new research has found.

Results released by JD Power revealed that while 42 per cent of Aussies are spending less during the COVID-19 pandemic, overall use of credit cards for household expenditures is rising.

Australia has a high percentage of cardholders (62 per cent) paying an annual fee, yet only 34 per cent say the value they receive from their card outweighs the annual fee they pay.

Cardholders with higher annual fees are less satisfied and redeem rewards less often than lower-fee customers and are failing to take advantage of their superior card benefits.

“People are relying on their credit cards to help cash flow, which makes it even more important that they are suitably matched to the right cards,” said Bronwyn Gill, head of banking and payments intelligence at JD Power Australia.

“While a strong mismatch was occurring before the pandemic, the change in spending habits is heightening this disconnect, affecting reward accumulation and perceived value. Cardholders are evaluating the existing cards they hold, and issuers need to ensure they are creating value for their customers to weather this storm.”

JD Power’s results highlighted the hardships many Australians are facing, with one in five respondents saying that since the pandemic began, they can no longer make their minimum monthly credit card payments.

The study also showed that most Australians will switch to a card that they believe has more benefits and rewards, yet the majority are carrying the wrong card.

Cardholders who are receiving more value from their primary card compared with the annual fee paid are significantly more likely to use benefits (63 per cent) compared with those cardholders who say they have less value (49 per cent).

Of the 14 per cent of cards aligned with airline rewards, 63 per cent of those cardholders have spending and usage habits that don’t align with card offerings. Airline cards will likely need to modify benefits/reward programs given the pandemic’s effect on the industry.

About the author

Cameron Micallef

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron Micallef

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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