Ease the credit card pain by choosing the cheapest card for you

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CREDIT card customers are continuing to get gouged by exorbitant rates despite a small dip to the average card rate in the past year.

Customers are paying as much as 24.5 per cent in interest rate charges and annual fees remain stubbornly high they can be up to $700 new analysis by financial comparison website RateCity shows.

Despite the Reserve Bank of Australia dropping the cash rate twice in the past year to 1.5 per cent, the average card rate has fallen from just 16.9 per cent to just 16.83 per cent in this period.

But the highest rate on a credit card has risen from 23.5 per cent to 24.5 per cent.

However, savvy card customers are still able to snare interest deals as low as 8.99 per cent through lenders including Bankwest and Community First Credit Union.

RateCity spokesman Peter Arnold says there are a few key things to look for in a card, especially as Christmas nears and many people rack up more debt and fail to pay it off in full.

Low rates and low fees for most people are the best place to start,’ he says.

Rewards can be great but unless you are paying your card off in full every time forget about it.

Latest RBA statistics show Australias ballooning credit card debt is far from subsiding.

Cardholders owe $51.2 billion on plastic and more than $32.5 billion is accruing interest.

With more than 180 cards on the market it can be a tough decision on which one to choose. National Australia Banks executive general manager of consumer lending, Angus Gilfillan, says there are several key things borrowers should do before signing up to any type of card.

Ask yourself whether you want a card with a low interest rate, a low annual fee, or one that rewards you for your everyday spending,’ he says.

If all you want is a basic credit card, with no associated rewards program and no frills, there are some simple low rate and low fee cards out there to choose from.

If a customer is chasing rewards, its important to look at the interest rate costs and annual fees that apply.

But regardless of what type of card users do sign up to, Gilfillan urges customers to try and pay off their balance in full each month.

@sophieelsworth