Interest rates, fees and charges

It's okay to use credit, but the trick is to not think about it as 'your' money. It's not. It's money you have borrowed that you have to pay back with interest, fees and charges, which can add up.

Interest rates

Smart tip

Some cards offer an introductory honeymoon interest rate but make sure you know what the normal interest rate is and the fees and charges.

 Credit providers charge interest on the credit you use. Interest is an extra amount you have to pay as a cost for borrowing. You pay interest on the amount of money you owe, so the quicker you pay a loan off, the less interest you pay.

Check the interest rate before you sign up for a credit card or loan. With a credit card you should also check the interest rate charged for late repayments (called default interest) as it is often higher than the normal interest rate.

Find out about home loan interest rates.

Fees and charges

Fees and charges are also often added to the cost of borrowing money. Before you sign up for a loan or credit card you should check the fees and charges as some credit providers have lower fees and charges than others.

Fees can change at any time if the credit contract allows, so make sure you read the updates you get from your credit provider. Updated fees should also be on the company's websites.

If you're paying too much in fees and charges you should shop around for the best credit deal.

If you want help comparing the features, fees and charges of credit cards online see our webpage on using comparison websites.

Some retailers may also charge a surcharge when you buy something in their store or online using a credit card, so consider whether other payment options might save you money.

Ban on excessive surcharge fees

From 1 September 2016 large businesses will be banned from charging excessive payment surcharge fees on debit, credit and prepaid card transactions. This means a business cannot charge a customer more than what it actually costs them to process a payment. These rules will apply to other businesses from 1 September 2017. For more information see credit, debt and prepaid card surcharges on the ACCC's website.

Find out more about fees charged on home loans.

Related links

Last updated: 31 Aug 2016