How credit card reforms will impact you:

79.5% of credit card holders in Australia have never switched their credit card.

Five of the new reforms apply only to new credit cards applied for and issued after the 1st July 2012, and Australians are being urged to compare the offers on the market and switch, in order to take advantage of these reforms and vital savings.

The following reforms apply only to new credit cards:

1. Over-limit fees will be banned unless you specifically agree that your lender can charge you a fee for the service.
2. You will be notified when you have exceeded your credit limit so you can decide whether to keep using your card or whether to make a payment to reduce your balance.
3. Credit card providers will be required to direct repayments to the most expensive part of your credit card debt first - making it easier to reduce your debt faster.
4. You will have more control over the amount of credit you receive. When you apply for a credit card you will be asked to nominate a credit limit.
5. Credit card key fact sheets will provide a standardised layout of key information.

Jeremy Cabral, Publisher of Australia’s top credit card comparison website, CreditCardFinder.com.au has the following tips and advice for mums looking to make savings on their credit card and clear debt faster:

Important Tips

1. Keep an eye out for your latest credit card statement.Your next credit card statement is going to be one of the most important you will receive. Credit card statements now have personalised information on how long it will take to repay your credit card balance based on only paying the minimum repaying on your outstanding balance each month. Arm yourself with this new to help you make your credit card comparison.
2. Review the family budget.If you can afford to make an additional repayment (as little as $50 extra each month can go a long way) beyond the minimum repayment amount on your credit card each month, you could potentially save yourself hundreds of dollars by reducing your credit card interest repayments and repayment period.
3. Watch out for the revert rate on balance transfers.If you are looking to switch credit cards using a balance transfer, it’s really important to check the terms and conditions to find out the interest rate that the credit card reverts to at the end of the balance transfer period. It is important to ensure it reverts to the purchase rate, as opposed to the cash advance rate which is typically much higher.

How to respond to the reforms

1. Do your research. Jump online to a credit card comparison website.
2. Assess your current credit card and whether it is appropriate. Don’t just switch for the sake of it - make sure you switch to the right card in the process.

Which sounds like you?

• Everyday user: Use your credit card regularly but ensure you stay within your means and repay your balance on time. In this scenario, if your spend levels are high enough, a rewards or frequent flyer credit card is worth researching in to, so long as the rewards value exceeds the cost of having the card.
• Debt revolvers: Typically spend more than you can afford to repay, and carry a balance each month not repaying credit cards back in full and on-time. This is where doing a balance transfer to a low interest credit card is worth considering to reduce interest rate charges on the outstanding balance.
• Big spending: Where you use your credit card for big purchases and pay your balance in full Rewards credit cards only make sense if you repay your balance in full and on-time each month, and the net reward value of the rewards points exceeds the cost of the annual fee
• Emergencies only: Where you keep a credit card only for the case of emergencies or unplanned impulse purchases. In this case, a credit card with a low or $0 annual fee is worth looking at.
• Compare, switch and save: It only takes a few minutes to compare and switch to a new card and you could start taking advantage of the new reforms that apply only to new credit card contracts after 1 July, 2012.