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How to stick it to your credit card provider: taking advantage of the latest reforms


The cost of everything keeps going up, but from July 1, there is a way for small business owners to cut one specific cost.

If you have a business credit card, the new credit card reforms can help you make massive savings and clear your debt faster.

Chances are, you didn’t even know these changes were coming. Despite how much of a difference the credit card reforms can make to an individual or business, 98% of Australians are unaware that these changes are evening happening.

The reforms are a series of changes regarding how credit cards are regulated. These changes have the potential to save over $2.4 billion in credit card charges. Yes, that much.

Some of the changes will apply retrospectively to all existing credit cards, while others apply to new credit card contracts approved after July 1st only.

The reforms will have the biggest impact for small business owners. So, here’s how to make the most of these reforms and save your business some bucks.

What should business owners know?

These are some simple points about the reforms that business owners should be aware of:

Reform #1: The hierarchy of repayments

Under this change, your credit card repayments will be allocated to the part of your balance the banks earn the most interest from, rather than the least. Previously, the opposite was true. The card provider allocated your repayment to the part of your balance that worked in their favour, not yours.

Ultimately, this change means that any payment made to repay your debt will be much faster.

This reform is only applicable to new cards and not to the current cards business owners currently have. So, to benefit from it, credit card holders should consider switching cards that will assist to clear their debt faster.

This change will work for cardholders who use their card for a variety of transactions.

Cash advances earn a higher interest rate than regular credit card purchases. So, say you have $1,000 as a cash advance and have made $1,000 in purchases. Under this new reform, if you make the minimum monthly repayments, this money will go towards paying off the cash advance first, as it is incurring a higher interest rate. This will save you $265.87 and six months of the time it takes to pay off the credit card.

Reform #2: Over-limit fees

In 2011 the banks made $487 million in over-limit fees on credit cards. The new reforms will mean that over-limit fees will be banned unless you specifically agree that your lender can charge you a fee for the service. If you don’t want to pay for over-limit fees, consider switching to a card provider that does not charge them.

This is a huge win for business owners and will have a considerable effect on their bottom line.

Reform #3: Personalised statements

Monthly credit card statements will now include personalised information.

One of the most useful will be that the statement will show long it will take to pay off their entire balance, if you are only making minimum monthly repayments.


All in all, these reforms present an opportunity for small business owners to manage their cash flow and credit cards in a more cost effective way.

There are two things that every business owner who uses credit cards should do:

1. Check the terms and conditions on your existing business credit card
2. Compare it with other cards to make sure you’re getting the deal that you want, especially when it comes to over-limit fees
3. If you want to switch cards, do it quickly before the card providers update their offers according to the new payment hierarchy laws.

Fred was inspired to enter the comparison space with Finder.com.au as he realised the need for Australians to compare financial products and switch, in order to help them save money and avoid traps and led to the setup of FINDER.COM.AU.