Credit card debt has reached a record high - and if you're keen to get rid of yours faster, it pays to hunt for the best deal.

At the end of December, we owed $6 billion on our plastic, up 3.8 per cent on the previous year. Almost two-thirds of that is being charged interest, at an average rate of 19.6 per cent, meaning banks are competing aggressively for the profits.

All major banks are offering balance transfer deals, in which people pay a low interest rate on the transferred amount for a fixed term or until it is paid off. For a big debt, changing cards could save you thousands of dollars.

The cheapest balance transfer rate is 1 per cent, from Westpac, for 12 months. If you are paying off a $5,000 credit card balance at $100 a month, transferring to that rate for a year will save you almost $1,000 in interest.


People with a long-term balance who will struggle to pay off quickly can also choose to pay more for a lower rate credit card. These low rates never expire.

Low-interest cards often have rates of about 12 per cent, compared to the standard 19.95 per cent, but the fees are twice as much. Someone with a $5,000 balance could save more than $5,000 if they paid off the amount at $100 a month on a low rate card.

"If you are carrying a balance, there is an argument for transferring your account on a regular basis so you're constantly getting the lower rate. There's nothing to stop you doing that unless the bank doesn't accept your request to transfer. But they want to get you on board and get you spending, so they will probably take you unless you are a bad credit risk," said Massey University banking expert Claire Matthews.

While the official cash rate and home loan rates have been at historic lows for three years, Matthews said credit card rates had not moved much because people did not think about them the same way as they did mortgages.

"People, in many cases, don't know what they are and persuade themselves that they are irrelevant because even if they are carrying a balance, they think they won't carry it for long, so it doesn't matter. And some people don't carry a balance, so it doesn't matter if the interest rate is 100 per cent. They won't pay it."

But the competitive transfer market did spark a warning from one financial adviser.

"Any money you save helps. However, I wonder if it might take away the incentive to pay off the debt as the interest rate is lower," said Lisa Dudson.

A Consumer NZ survey showed that ANZ Qantas Visa, which costs $150 a year at 19.95 per cent, or a balance transfer rate of 2.99 per cent, offered the best returns of the reward schemes. It would generate $267 in value after two years for someone who spent $15,000 on it a year, after fees.