January 10, 2026 — 5:01am
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They say the average New Year’s resolution lasts 11 days – and guess what? It’s January 10. So it’s just about time to forget any vague overhaul intentions you may have – you know, the spend less, save more, quit-fast-fashion type. Indeed, you may have already!
Instead, resolve – in the next week or two – to flip three key banking products. Because I can reveal that a ditch and switch of the average credit card, personal loan and mortgage today would save the typical Aussie nearly $500 a month. Let’s break it down.
Reviewing your expenses could put up to $500 a month back in your wallet.Aresna Villanueva
Your credit card: The average outstanding credit card balance is $1588, says the RBA (dividing the balance of personal cards accruing interest by the number of cards). Now the dirty little secret of the credit card industry is that – whether official rates go high or low – credit card rates barely budge.
The average, Mozo says, remains about 18 per cent, where it has been since well before the cash rate was its highest at 7.25 per cent nearly 20 years ago, before first being slashed because of 2008’s global credit crack-up.
Contrast this with today’s most competitive rate of 8.99 per cent (on offer on various cards, including ones from Community First, Defence Bank, Easy Street and MOVE Bank).
That interest rate difference in dollars, if you repaid just the minimum, is $2016, with a card on the higher interest rate taking seven years more to repay. Even the lower rate takes more than eight years to clear.
There’s an equivalent of almost four rate cuts you could give yourself rather than waiting for them to be Reserve Bank-bestowed.
But there’s a far better way – a way to pay nothing. The available cards are shrinking, but new customers can still get a 0 per cent balance transfer credit card for 26 months from ANZ (and 24 months from Bankwest and MyCard).
This means, as it implies, that you get that amount of time interest-free – giving you a window of opportunity to repay it at no extra cost.
Average saving: $1990 over 26 months … calculated by assuming that you pay the same amount required to clear your debt in 26 months on a 0 per cent card, on an 18 per cent card: $61 a month. You can crunch the numbers on your own potential saving on moneysmart.gov.au’s credit card calculator.
Your personal loan: The most common value of one or more personal loans across Australia is more difficult to ascertain, but $25,000 – usually at least partially for a car – is not atypical.
Here, Mozo says the average interest rate is 9.57 per cent while the best is way down at nearly half that much: 5.76 per cent (from Harmoney, a risk-based pricing loan – the better your credit score, the lower your rate).
Average saving: Assuming a five-year loan, $45 a month or $2700 over five years.
Your mortgage: This, as probably your biggest debt (but against your most likely biggest asset), is where you almost certainly stand to make the biggest savings.
The average variable rate for owner occupiers is 6.13 per cent, Mozo says, against the cheapest quality mortgage (with a real offset account) of 5.2 per cent (products in that interest rate vicinity are available from Bank of China, Up and Queensland Country Bank, with People’s Choice, Police Credit Union and Northern Inland Credit Union coming close).
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In case you didn’t clock that, there’s an equivalent of almost four rate cuts you could give yourself rather than waiting for them to be Reserve Bank-bestowed. And, indeed, it’s timely given the next official cash rate move still looks like being up (despite lower inflation last week).
What’s your potential saving as per the average home loan today nationally, which has forged scarily close to $700,000 at $694,000, on the latest lending statistics from the ABS? $388 a month, or $116,400 over 25 years.
But here’s the thing … if you can at all manage to keep your repayments the same after switching, then you will achieve mortgage-freedom not $116,400 more cheaply but for $215,155 less.
What’s more, you will discharge your loan four years early – at which point there will obviously be no monthly mortgage payments to pay. And remember, that’s for not outlaying a penny more than you are used to today.
This New Year, give that some thought.
Nicole Pedersen-McKinnon is author of How to Get Mortgage-Free Like Me, available at www.nicolessmartmoney.com. Follow Nicole on Facebook, X and Instagram.
Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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