The Commonwealth Low Rate credit card might be easy to confuse with its much less appealing brother, the Low Fee credit card. They have identical features, except this card has a much lower interest rate (11.74% instead of 18.49%) and a slightly higher annual fee ($48 instead of $24).
Think about that for a moment: for an additional $24 per year, you get a 6.75% purchase rate discount. With a very conservative balance of $1,000, you'd pay around $184.90 in interest per year on the Low Fee card. On this card, you'll pay $117.40, a saving of $67.50. According to the Reserve Bank, the average Australian credit card balance is $3,139. Using this figure, the 'average Australian' will save around $211.88 per year on this card, compared to the Commonwealth Low Fee.
It's almost as if Commonwealth want to drive customers toward this card by presenting a much less appealing option, in the same way people look more attractive standing next to their ugly friend.
But this card doesn't just look good in comparison to the Low Fee. By its own right, it's a very good option for students, travellers, first-time credit card shoppers and the budget conscious. 11.74% is not the lowest available rate, but it's close. It also offers 55 days interest free, a complimentary additional card and a modest 5.99% for five months on balances transferred.
On the downside, the cash rate remains at 19.99%, but unless you're planning some major cash advances, it won't be relevant.
For anyone tossing up between the two cards, the decision is a no-brainer. Our major criticism of the Low Fee credit card was that it has a high purchase rate. The Low Rate card corrects that problem, but without over-balancing the annual fee. For students, first-timers and those looking for a simple, no-frills credit card, the Commonwealth Low Rate should be high on their short list.
