Aussies clueless about credit card interest rates, Choice survey finds A survey by the consumer group Choice has found credit cards are designed to distract consumers from very high interest rates. NEARLY half of Australians don't know or aren't sure of the interest rate that applies when they use their credit card. A survey by the consumer group Choice has found credit cards are deliberately confusing products, designed to distract consumers from very high interest rates. "As a nation, we're paying interest on more than $36 billion of credit card debt, yet almost half of us are uncertain what it costs us," the chief executive of Choice, said Alan Kirkland, said. As the Reserve Bank board prepares to meet tomorrow, the Choice study finds the gap between the Reserve Bank's cash rate and the average credit card interest rate has widened by 176 basis points over the last two years. Beat the great credit card rip-off The difference would have meant a $630 million windfall for the banks in this year alone. If the banks had lowered credit card interest rates in lock step with the Reserve Bank over the past two years, Choice estimates the average Australian credit card user would be over $80 a year better off. "Credit cards are marketed as a convenient payment option, often with a modest annual fee, honeymoon interest rate periods and seemingly lucrative rewards programs," Mr Kirkland said. But the real rewards program here is for our banks who earn an estimated $6.2 billion in revenue from average credit card interest rates of 17.16 per cent. Australians have 15.4 million credit cards in their wallets, figures from the Reserve Bank show, on which we are paying interest on $36 billion in outstanding balances. At the average credit card interest rate of 17.16 per cent, this means we pay a whopping $6 billion a year in interest to lenders. Qantas cuts debit-card surcharge Because borrowers pay less attention to their credit card rate than their home loan rate, the banks are able to charge more, Choice says. "The consumer psychology around credit cards is very different to home loans, where we see so much focus on interest rate movements, and a huge amount of public pressure," Mr Kirkland said. That's a problem, because there is really a lot more choice in the credit card market, with many no frills, low-interest options. According to Choice's "Compare, Ditch &Switch" website, the average interest costs of the five cheapest credit cards is $1,300 less than the five most expensive over three years. This assumes a balance of $3000.. "The message is simple - check your credit card interest rate, and if you're someone who does not pay off your balance in full every month, consider switching to a low-rate, low-fee card," Mr Kirkland said. ends