Get your credit card interest rate lowered
SHOPPERS can slash their credit card interest rates if they sign up to the newest way to pay back debt.
Multiple institutions now allow cardholders to use structured repayment plans over a set time frame, which feature a discounted interest rate on purchases made.
Financial comparison website RateCity's spokeswoman Sally Tindall describes it as a way for financial institutions to compete with rapidly growing buy now, pay later schemes.
"You can put big-ticket items on repayment plans and often you can pay them off at a lower rate in monthly instalments,'' she said.
"It's the bank's answer to Afterpay."
Multiple lenders including Bankwest, ING, Virgin Money, Citi and American Express offer repayment plans on some cards but Ms Tindall warns there are plenty of traps to watch out for.
Repayment plans can run for periods of up to five years and some providers charge upfront fees.
To sign up to a repayment plan cardholders must first buy something and then use their online banking or app to select it as a repayment plan purchase.
Bankwest offers repayment plans on all its credit cards and the bank's general manager of products Paul Vivian said it can give customers significant interest discounts.
"Easy instalment plans are currently offered for a period of three to six months and depending on the offer available have a rate ranging from zero per cent to 3.99 per cent, which would apply to the eligible purchase,'' he said.
Customers must make minimum monthly repayments on debt owing on their card and also make the minimum repayments on the repayment plans each month.
However, if there is money still owed at the end of the instalment term the interest rate on this debt will jump to the standard purchase rate. This can be more than 20 per cent.
Ms Tindall also said one of the sneakiest traps is that any money paid towards the card's debt will often go straight to the instalment plan purchase ahead of other debt owing on the card that is attracting a higher interest rate.
"These can be a good option if you are looking to make a big purchase and don't have the funds for it as long as you are diligent about meeting every repayment,'' Ms Tindall said.
"But you have to read all the terms and conditions because the devil is in the detail with these cards."