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One in three don't know how credit card fees work, survey finds

Business

A third of people who took part in a RACQ Bank survey admitted they had no basic knowledge of credit card fees.

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The research also found more than 20 per cent of Queenslanders didn’t understand what a credit rating was and how it
affected them. About half didn’t understand credit insurance or credit card charge backs.

RACQ Bank spokeswoman Lucinda Ross said it was concerning that so many Queenslanders didn’t understand some of the basic fees or terms associated with credit cards.

“We found more than half didn’t understand credit card chargebacks or consumer credit insurance, which could cost them at bill time.

“While credit card chargebacks can help consumers with a purchasing issue, consumer credit insurance offers really poor value for money. It’s important, if you have a credit card, to understand exactly what you’re paying for.”

A chargeback occurs when a cardholder sees a transaction on their credit card that they don’t believe they have made, or if the customer was charged the incorrect amount, they can dispute that transaction with their bank or financial institution.

Ross said Queenslanders should only sign up for a credit card if they understood how fees, charges, and payments worked, and if they could comfortably pay the balance back before the due date each month.

“It’s clear Queenslanders are confused by critical aspects of having a credit card, and we don’t believe it’s right to encourage use of something you don’t clearly understand,” she said.

“If you’re not sure what your credit card is doing to your hip pocket, or when your repayment is due, jump online and do some research.

“More than 20 per cent of Queenslanders don’t understand what a credit rating is and how it affects them, but it’s really important you don’t put yourself at risk having a bad credit rating.

“Your credit score is calculated based on the amount of money you’ve borrowed, the number of credit applications you’ve made and whether you pay on time.

These factors can vary widely, so make sure you’re keeping track of how your credit behaviour impacts your score to safeguard your future.”

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