Welcome to the Fear and Greed business Interview. I'm Sean Alma. Australians are becoming smarter with the use of credit cards, but banks are increasing fees as a way to recoup lost revenue. Financial comparison site MOSO has done a detailed analysis of credit card rates, fees and spending across the last decade. It's a period that also captures the rise and rise of buy now, Pay later, which has been thoroughly embraced by Australians, highlighting the need for better tracking and regulation. Rachel Wostel is the personal finance expert at financial comparison site MOSO. Rachel, welcome to Fear and Greed.

Welcome to the Fear and Greed business Interview. I'm Sean Alma. Australians are becoming smarter with the use of credit cards, but banks are increasing fees as a way to recoup lost revenue. Financial comparison site MOSO has done a detailed analysis of credit card rates, fees and spending across the last decade. It's a period that also captures the rise and rise of buy now, Pay later, which has been thoroughly embraced by Australians, highlighting the need for better tracking and regulation. Rachel Wostel is the personal finance expert at financial comparison site MOSO. Rachel, welcome to Fear and Greed.

Thank you so much for having me. A pleasure to be here. I love talking about credit cards.

Thank you so much for having me. A pleasure to be here. I love talking about credit cards.

A decade is a long time, especially in credit cards. What's the standout trend you've observed.

A decade is a long time, especially in credit cards. What's the standout trend you've observed.

Yeah, so, a positive thing that we have seen over the past decade in terms of the credit card market is that Australians are becoming savvier with spending. Their transactions are getting smaller and the balance accruing interest, so the balance they're not paying off by the end of the billing cycle is reducing, so we've seen a dramatic drop. There was a forty five percent drop in the balances accruing interest according to the RBA in the past ten years, which is massive, and the average spend has dropped from one hundred and eighteen dollars down to ninety dollars.

Yeah, so, a positive thing that we have seen over the past decade in terms of the credit card market is that Australians are becoming savvier with spending. Their transactions are getting smaller and the balance accruing interest, so the balance they're not paying off by the end of the billing cycle is reducing, so we've seen a dramatic drop. There was a forty five percent drop in the balances accruing interest according to the RBA in the past ten years, which is massive, and the average spend has dropped from one hundred and eighteen dollars down to ninety dollars.

Okay, so people don't have those as well. They still have big debts at the end of the month, but not as big as they did have. What about the actual amount being spent on domestic credit card purchases, has that gone up or down? What's happened there?

Okay, so people don't have those as well. They still have big debts at the end of the month, but not as big as they did have. What about the actual amount being spent on domestic credit card purchases, has that gone up or down? What's happened there?

Yeah, so the balance, like the amount that people are actually spending, is still increasing, but it's the transaction, so the purchases are getting smaller. So it looks like Australians are actually making smaller and more manageable transactions. As the cost of living increases and we're in a high higher rate environment, people are kind of looking at their credit card debt a little bit more conservatively. However, you know, there is the risk that it's not just that they're not accruing debt. It might be that they're not accruing debt on their credit cards because the problem is they've got buying our pay later services, and we can't actually track the amount of debt that is being or there's no regulatory authority that tracks the level of debt that people have, so there might be a different kind of balance, or the balance as accruing interest is dropping and it's just been repositioned into the B ANDPL debt market.

Yeah, so the balance, like the amount that people are actually spending, is still increasing, but it's the transaction, so the purchases are getting smaller. So it looks like Australians are actually making smaller and more manageable transactions. As the cost of living increases and we're in a high higher rate environment, people are kind of looking at their credit card debt a little bit more conservatively. However, you know, there is the risk that it's not just that they're not accruing debt. It might be that they're not accruing debt on their credit cards because the problem is they've got buying our pay later services, and we can't actually track the amount of debt that is being or there's no regulatory authority that tracks the level of debt that people have, so there might be a different kind of balance, or the balance as accruing interest is dropping and it's just been repositioned into the B ANDPL debt market.

That would be worrying, wouldn't it if more people have buying our pay later, because that's that particular method of payment seems to be going from strength to strength.

That would be worrying, wouldn't it if more people have buying our pay later, because that's that particular method of payment seems to be going from strength to strength.

Yeah.

Yeah.

I think what's most concerning is we did some research recently. We found that fifty four percent of credit card holders also had at least one B and PL account, So that means that it might be positive that we're spending less on the credit card, but we're just kind of off putting these payments until later. The problem with buying now pay later is that people think they have all this money, but you're just delaying the debt. So it's not that you're not accruing the debt, and that that is a bit dangerous because you think you have more money than you really do.

I think what's most concerning is we did some research recently. We found that fifty four percent of credit card holders also had at least one B and PL account, So that means that it might be positive that we're spending less on the credit card, but we're just kind of off putting these payments until later. The problem with buying now pay later is that people think they have all this money, but you're just delaying the debt. So it's not that you're not accruing the debt, and that that is a bit dangerous because you think you have more money than you really do.

Okay, just the forty five percent reduction and credit card debt accruing interest. Are we more used to interest free periods? What's the reasoning behind that. Is it the fact that we are having smaller transactions and maybe it's on by now, pay later, or is there more to it than that. Are we just getting more savvy.

Okay, just the forty five percent reduction and credit card debt accruing interest. Are we more used to interest free periods? What's the reasoning behind that. Is it the fact that we are having smaller transactions and maybe it's on by now, pay later, or is there more to it than that. Are we just getting more savvy.

I think it's probably a combination of both. Unfortunately, we don't have the data.

I think it's probably a combination of both. Unfortunately, we don't have the data.

To see whether that proportion of debt has just been repositioned, so we can't really say that. We did some research ourselves at MOSO to look at how much debt people had on average, and we found that with one across the board with BNPL users, they had about nine hundred and nineteen dollars of outstanding debt, and some with four BNPL accounts actually had seventeen hundred dollars just upwards of seventeen hundred.

To see whether that proportion of debt has just been repositioned, so we can't really say that. We did some research ourselves at MOSO to look at how much debt people had on average, and we found that with one across the board with BNPL users, they had about nine hundred and nineteen dollars of outstanding debt, and some with four BNPL accounts actually had seventeen hundred dollars just upwards of seventeen hundred.

Dollars on average in debt.

Dollars on average in debt.

So it might be that they're just kind of transferring that outstanding debt, which is smarter because you're not paying you know, that double digit interest on a credit card, But it does just mean that it's repositioned rather than actually getting rid of that debt.

So it might be that they're just kind of transferring that outstanding debt, which is smarter because you're not paying you know, that double digit interest on a credit card, But it does just mean that it's repositioned rather than actually getting rid of that debt.

So I think there's a few factors at play.

So I think there's a few factors at play.

Also, people are becoming SAVVR with spending as things get more expensive, and I think we're getting used to this idea of having that, you know, part pay and kind of pushing your payments back and not really wanting to commit to paying double digit and interest.

Also, people are becoming SAVVR with spending as things get more expensive, and I think we're getting used to this idea of having that, you know, part pay and kind of pushing your payments back and not really wanting to commit to paying double digit and interest.

Stay with me, Rachel, we'll be back in a minute. My guest this morning is Rachel Wastel from Moso, Okay. So back to credit cards. One of the things you found, which I thought was really interesting is that there are more low rate and more high rate cards. Where the decline has been is in the medi range cards. Why and is it a good or a bad thing for consumers?

Stay with me, Rachel, we'll be back in a minute. My guest this morning is Rachel Wastel from Moso, Okay. So back to credit cards. One of the things you found, which I thought was really interesting is that there are more low rate and more high rate cards. Where the decline has been is in the medi range cards. Why and is it a good or a bad thing for consumers?

So this was the most interesting thing we saw. It was like a polarization of the credit card market.

So this was the most interesting thing we saw. It was like a polarization of the credit card market.

And those mid range.

And those mid range.

Cards between ten and fifteen percent per annum dropped by fifty seven percent, So that's quite a lot. It lost about forty four cards over ten years that in that space. But we did see a very big growth in the low rate so cards under ten percent, they grew by six hundred percent. It was an extra twelve cards added to that pool. But we also saw you know, the twenty five percent and over and definitely that twenty percent and over growing as well, so, I think the polarization is for two reasons. The higher rates are likely banks trying to recoup the interest revenue that they're losing because people are transferring or kind of changing their patterns to rely on interest free debt rather than credit card debt. And balancers are crewing. Interests are reducing, so there's less kind of interest earned there. And then on the lower side, I think there's an opportunity for smaller brands and smaller providers to come in quite competitively and attract the credit card market away from the bigger banks that are charging a little bit more.

Cards between ten and fifteen percent per annum dropped by fifty seven percent, So that's quite a lot. It lost about forty four cards over ten years that in that space. But we did see a very big growth in the low rate so cards under ten percent, they grew by six hundred percent. It was an extra twelve cards added to that pool. But we also saw you know, the twenty five percent and over and definitely that twenty percent and over growing as well, so, I think the polarization is for two reasons. The higher rates are likely banks trying to recoup the interest revenue that they're losing because people are transferring or kind of changing their patterns to rely on interest free debt rather than credit card debt. And balancers are crewing. Interests are reducing, so there's less kind of interest earned there. And then on the lower side, I think there's an opportunity for smaller brands and smaller providers to come in quite competitively and attract the credit card market away from the bigger banks that are charging a little bit more.

Okay, and that's the interest rate. What about what's happening on annual fees?

Okay, and that's the interest rate. What about what's happening on annual fees?

Yeah, so annual fees, especially in the rewards card space, are getting quite hefty. We saw the highest annual fee in twenty fourteen this seven hundred dollars that before is the highest is twelve hundred dollars per year.

Yeah, so annual fees, especially in the rewards card space, are getting quite hefty. We saw the highest annual fee in twenty fourteen this seven hundred dollars that before is the highest is twelve hundred dollars per year.

Wow, so wow, yeah, Well, how can you get away with that? Just have an amazing rewards scheme? Supposedly?

Wow, so wow, yeah, Well, how can you get away with that? Just have an amazing rewards scheme? Supposedly?

Yes, And the things with the reward schemes is they can, like, don't get me wrong, they can be great, but you need to make sure that at least what you're getting back from your rewards is covering the cost of your annual fee. Because if you don't get a positive net return on your rewards and you're not even getting enough rewards to cover the cost of the fee you're paying every year, it's just not worth it. But there are a number of those lower rate cards. They do come with fees, annual fees under fifty dollars, so you do have an opportunity to get a low rate and a low annual fee card. But you do kind of have to look outside the big banks and maybe go past that aurture of sticking with a big bank just for the name.

Yes, And the things with the reward schemes is they can, like, don't get me wrong, they can be great, but you need to make sure that at least what you're getting back from your rewards is covering the cost of your annual fee. Because if you don't get a positive net return on your rewards and you're not even getting enough rewards to cover the cost of the fee you're paying every year, it's just not worth it. But there are a number of those lower rate cards. They do come with fees, annual fees under fifty dollars, so you do have an opportunity to get a low rate and a low annual fee card. But you do kind of have to look outside the big banks and maybe go past that aurture of sticking with a big bank just for the name.

You do a lot of research into this. What I always find interesting when we talk about this sort of thing is that I would have no idea about any of this stuff on my own credit cards. Is it a worthwhile exercise? I mean, just go to MOSO, that's probably the best option. But is it a worthwhile exercise for individuals to spend time going through all this because it seems like a lot of work. It's actually kind of hard sometimes to sort out whether you're getting a benefit or not from the fee, from the rewards from the high or low interest rate.

You do a lot of research into this. What I always find interesting when we talk about this sort of thing is that I would have no idea about any of this stuff on my own credit cards. Is it a worthwhile exercise? I mean, just go to MOSO, that's probably the best option. But is it a worthwhile exercise for individuals to spend time going through all this because it seems like a lot of work. It's actually kind of hard sometimes to sort out whether you're getting a benefit or not from the fee, from the rewards from the high or low interest rate.

Yes.

Yes.

And on the mos OF database there's one hundred and ninety nine personal credit cards that we reviewed as a part of this analysis. So what consumers could do is Moso. We just recently released our credit card awards so MOSO Experts Choice, where we looked at one hundred and ninety nine cards or the rates and fees and found the best in terms of the cheapest for certain areas. I think when you're looking for a credit card, first thing, make sure you know what you're paying, so check your rate and check your annual fee. Definitely check any other fees you've got on there. But the second is you need to make sure that you're not trying to get a card with everything, because there will never be a credit card that gives you the best of everything. You really need to sit back and think, Okay, do I clean my balance every month? If not, really opt for the low rate first. If you're good at clearing your balance, try and find a low annual fee with a low rate as good as you can to get that.

And on the mos OF database there's one hundred and ninety nine personal credit cards that we reviewed as a part of this analysis. So what consumers could do is Moso. We just recently released our credit card awards so MOSO Experts Choice, where we looked at one hundred and ninety nine cards or the rates and fees and found the best in terms of the cheapest for certain areas. I think when you're looking for a credit card, first thing, make sure you know what you're paying, so check your rate and check your annual fee. Definitely check any other fees you've got on there. But the second is you need to make sure that you're not trying to get a card with everything, because there will never be a credit card that gives you the best of everything. You really need to sit back and think, Okay, do I clean my balance every month? If not, really opt for the low rate first. If you're good at clearing your balance, try and find a low annual fee with a low rate as good as you can to get that.

And if you.

And if you.

Have a huge pile about standing debt on your credit card, you might want to opt for a balance transfer to reduce the interest on that. If you're great with spending, and you're great with then you want to do that great with your credit card money matter, and you want to get some good rewards, and you go on a fair fe your holidays a year, then you might actually get the best bang for your buck by spending high on your fee and then getting all the lounge passes and concierge service and discounts. And it really depends on what you're looking for. But the first thing is look at your statement and figure out what your radius and what your fees are.

Have a huge pile about standing debt on your credit card, you might want to opt for a balance transfer to reduce the interest on that. If you're great with spending, and you're great with then you want to do that great with your credit card money matter, and you want to get some good rewards, and you go on a fair fe your holidays a year, then you might actually get the best bang for your buck by spending high on your fee and then getting all the lounge passes and concierge service and discounts. And it really depends on what you're looking for. But the first thing is look at your statement and figure out what your radius and what your fees are.

Just moving beyond credit cards, we started talking about buying now, pay later and the fact that we don't know a lot about it. What sort of changes do you think we need in that space, be that regular tree or even just tracking or something like that to try and get a handle on how much debt there is in that buy in our pay later space because ultimately people have to pay it off. So what kind of are we missing at the moment?

Just moving beyond credit cards, we started talking about buying now, pay later and the fact that we don't know a lot about it. What sort of changes do you think we need in that space, be that regular tree or even just tracking or something like that to try and get a handle on how much debt there is in that buy in our pay later space because ultimately people have to pay it off. So what kind of are we missing at the moment?

Absolutely, I think the key would be first to start tracking it. I know that new regulation was introduced earlier this year to make sure that consumers were protected, but we're still not seeing what the level of debt in that area is and that I think is the most dangerous and I guess most crucial point, because it does look like from the data we had in the analysis we did that there's this positive shift and consumers are being more responsible and we're reducing our balances accruing interest and we're spending less per transaction on credit card, which is great. But if there's this hidden pile of debt that we're relying on, and now you can use buy now, pay later for fuel, you can use it for every day essential so are we kind of relying on a service that we're not even properly tracking. I'd love to see it in the way I see the RBA Retail payments data, to be able to look at it and how it's changing and how it's how it's kind of growing in comparison to credit cards.

Absolutely, I think the key would be first to start tracking it. I know that new regulation was introduced earlier this year to make sure that consumers were protected, but we're still not seeing what the level of debt in that area is and that I think is the most dangerous and I guess most crucial point, because it does look like from the data we had in the analysis we did that there's this positive shift and consumers are being more responsible and we're reducing our balances accruing interest and we're spending less per transaction on credit card, which is great. But if there's this hidden pile of debt that we're relying on, and now you can use buy now, pay later for fuel, you can use it for every day essential so are we kind of relying on a service that we're not even properly tracking. I'd love to see it in the way I see the RBA Retail payments data, to be able to look at it and how it's changing and how it's how it's kind of growing in comparison to credit cards.

But right now we don't have that data available.

But right now we don't have that data available.

And finally, Rachel, we've been talking about what's happened the next ten years, anything that we should really keep it. I mean, people will still be using credit cards, buy our pay lad is here to stay. I presume anything else that we should be keeping an eye.

And finally, Rachel, we've been talking about what's happened the next ten years, anything that we should really keep it. I mean, people will still be using credit cards, buy our pay lad is here to stay. I presume anything else that we should be keeping an eye.

I think it'll be interesting to see how the younger generation, specifically Gen Z, whether they do end up kind of in that credit card cycle.

I think it'll be interesting to see how the younger generation, specifically Gen Z, whether they do end up kind of in that credit card cycle.

I think it is.

I think it is.

Buye now, pay later may kind of grow to be a bigger beast than it is now. I do think that, you know, don't I guess take this as gospel, but there is a little bit of a fear in me that just like Netflix and Prime Video, they came in as these subscription services and they were completely free of ads, and they built up their subscription model and now they're introducing ads.

Buye now, pay later may kind of grow to be a bigger beast than it is now. I do think that, you know, don't I guess take this as gospel, but there is a little bit of a fear in me that just like Netflix and Prime Video, they came in as these subscription services and they were completely free of ads, and they built up their subscription model and now they're introducing ads.

So I just think there's perhaps, you.

So I just think there's perhaps, you.

Know, in the future, if we do become very reliant on these buy now, pay later and it's very consolidated market, you know, a very concentrated market with only a few major players. If they do get a handle on the credit card market and we're not tracking it, it will be interesting to see what types of feason and charges are introduced once they grow their market share.

Know, in the future, if we do become very reliant on these buy now, pay later and it's very consolidated market, you know, a very concentrated market with only a few major players. If they do get a handle on the credit card market and we're not tracking it, it will be interesting to see what types of feason and charges are introduced once they grow their market share.

Hmm. Interesting. Rachel, thank you for talking to Fear and Greed.

Hmm. Interesting. Rachel, thank you for talking to Fear and Greed.

Thank you so much for having me.

Thank you so much for having me.

That was Rachel Wastel, personal finance expert at financial comparison site MOSO. This is the Fear and Greed Daily Interview. Join us every morning for the full episode of Fear and Greed Daily business years for people who make their own decisions. I'm Sean alma Enjoy your day.

That was Rachel Wastel, personal finance expert at financial comparison site MOSO. This is the Fear and Greed Daily Interview. Join us every morning for the full episode of Fear and Greed Daily business years for people who make their own decisions. I'm Sean alma Enjoy your day.