Business news - Commerse, Financial industry and Money

Is your credit card doing you damage

CREDIT card interest rates remain at stubbornly high levels but this isn’t the only card cost that may be doing you damage.

Annual fees are one of the first stings when it comes to paying by credit costing up to $700 a year.

They are often linked to cards that come with all the bells and whistles including rewards points.

However there are many fee-free options available but theres a catch consumers need to be aware that you can be hit with higher interest charges if you opt for a low or no-annual-fee card.

Financial comparison website spokeswoman Bessie Hassan says for those card users who are unable to wipe their plastic debts in full each month, they are often better to pay extra in annual fee charges if it means getting a cheaper interest rate in return.

We find the sweet spot with annual fees is the $15 to $39 range where the average interest rate currently sits around 15.1 per cent,’ she says.

While you might save money by going with a $0 annual fee card, youre likely getting slugged with a higher interest rate. analysis shows in July this year there were 16.58 million cards in circulation and the average balance was $1941.

But despite the cash rate taking a downward spiral in recent years, the average interest rates on cards have barely budged.

The average card rate on new purchases sits at 17.25 per cent and the average cash advance rate is slightly higher at 19.43 per cent for any cash withdrawals made.

Front Row Financials director Brendan Turnbull says card customers need to be wary of any type of card deal and clearly understand why institutions offers incentives such as honeymoon interest-free offers.

You need to ask yourself why a bank would give you interest free money and a rewards program,’ he says.

People need to be aware that if you dont pay the closing balance on the statement you end up paying interest for the previous month and the current month youre in.

If you are choosing a rewards card, cardholders are only ahead if they spend at least $18,200 per year.

However for offers where you can accumulate tens of thousands of points just for signing up it may be worth it, but be sure to read the fine print first.


The gst should be applied to fresh food health and education liberal mp dan tehan

ONE of Tony Abbott’s MPs has gone public in calling for the federal government to bite the bullet and broaden the GST this year.

Dan Tehan describes the Goods and Services Tax as unfinished business and making it apply to fresh food, health and education as the missing link.

EARLIER: Tony Abbott calls for "mature debate" on GST with states

Writing in the Financial Review, the Member for Wannon said in 2015 tax reform is no longer an option for Australia, but a condition for future growth and enhanced competitiveness.

This year must begin where the Coalition left off when last in government, Mr Tehan said.

We must finish reforming our tax system by broadening the GST.

But Acting Opposition Leader Tony Bourke said the government was paving the way for changes to the GST.

Be in no doubt this is not members of Parliament acting alone, he told reporters in Canberra.

Mr Burke said the leadership of the Liberal party would have known about Mr Tehans article.

This is Tony Abbott preparing the way for changes to the GST.

The Liberal MP, Mr Tehan, said the breadth of the GST base was diminished under John Howard to get the reform through a hostile Senate.

More recently, Labors Henry tax review ruled out changes to the GST out of fear of unpopularity in the polls.

If we cant handle the task of making our tax system work now, we will hand a bound and broken Australia to our children.

Mr Tehan cites the public comments of former Prime Ministers Bob Hawke, Paul Keating and John Howard last week, calling for urgent action on tough reforms, to fix the budget.

Despite its resounding success in increasing wage growth and competition, the GST remains unfinished business.

Broadening the GST is the missing link.

It would deliver up to $21.6 billion in extra revenue each year and enable further serious reductions in direct taxes.

The Coalition has included the GST in its upcoming tax white paper.

Tony Abbott has previously said he wants a mature debate on the tax, which he would need the help of the states to reform.

According to Shadow Health Minister Catherine King extending the GST to health would slug families around $3 billion a year.

New Health Minister Sussan Ley must immediately rule out a new GST on hospital visits, going to the doctor and general healthcare, she said in a statement.