Students are being slugged inflated interest rates for credit cards, experts warn.
CASH-strapped university students earning as little as $6000 a year are being targeted by the big banks with credit cards slugging them with exorbitant interest rates higher than 20 per cent.
More than one million students are set to hit campuses across the country this week to start the university year and they’re being warned to be careful before signing up to plastic deals.
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Student credit cards have interest rates around 20 per cent.Source:Getty Images
The student credit card products directly targeted to those studying are being offered by three of the four big banks — ANZ, Commonwealth Bank and Westpac — and all have card rates around the 20 per cent mark.
Of them Westpac offers the highest purchase rate on a student credit card at 20.45 per cent and some deals waive the annual fee charges.
This is despite some of the lowest credit card deals being offered on the market as low as 7.99 per cent.
Financial comparison website Canstar’s spokeswoman Justine Davies warned students — many of whom will be signing up to their first card — to look for an offer with a much lower rate.
“A $1000 ongoing debt for example could end up costing students up to $200 each year,’’ she said.
“While waiving an annual fee might be nice the value of that waiver would be far outweighed by the interest charges if the student goes into debt.”
Canstar spokeswoman Justine Davies has advised Aussie students to do their research before signing up for a credit card.Source:Supplied
Latest Reserve Bank of Australia data shows Australians owe a whopping $52 billion on credit cards and about $32.1 billion is accruing interest.
But despite the high rate student cards a Westpac spokeswoman said there are other card options available for students.
“Some customers are interested in a lower annual fee, rewards points or lower interest rates,’’ she said.
“While the student credit card offers a lower annual fee of $30 (waived in the first year), we also offer a low rate credit card (13.49 per cent) to student customers.”
An ANZ spokesman said students can also apply for low rate credit cards and many will be assessed for a lower minimum credit limit of $500.
sophie.elsworth@news.com.au
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