If you signed up for a low rate credit card, you may not be getting as good of a deal as you think. Credit card companies aren’t passing along a significant amount of the discounts from lower official interest rates, and according to The Advertiser low interest credit card holders are shouldering most of the burden.

Penalised for Good Credit?

Low interest rates are traditionally reserved for those with good credit, while riskier borrowers are subjected to higher interest rates. While it’s true that a low interest credit card (like the Aussie MasterCard) will have a lower APR than other cards, what you may not know is that interest on those low rate cards has increased more than corresponding rates on other credit cards.

To put it in perspective, APRs on low interest credit cards have increased on average by nearly 1% since 2007, while average interest on higher rate cards increased by only one-tenth of one percent. That’s nearly ten times the increase for lower risk card holders.

Why are Rates up at All?

While it may seem unfair that the interest rates on low rate cards are increasing faster than those of higher rate cards, it gets worse. Why are credit card companies charging you more at all?

The official interest rate set by the Reserve fell by more than 3% in that same period, making it illogical on a basic level for consumer interest rates to increase at the same time. Blame the economy though — at least according to credit card companies. As economic conditions got rough for some (and remain so), more people were defaulting on their credit card debt. Because of that, all lending is a higher risk for the banks now, so you (as a creditworthy consumer) foot the bill through higher interest rates.

Let this recent news serve as a reminder that there’s more to choosing a credit card than solely looking at interest rates. They may rise and fall over time, and that “great deal” may not be so great after all. Instead, find ways to get around increased interest rates.

To decrease your own interest rates one option is to look for 0% interest offers on balance transfers, such as with the ANZ Balance credit card. These offers allow you to move your balance away from a higher interest card (or any interest on your current card) for a limited period of time. That means you may be able to pay off the balance free from further interest.

Also look for credit cards featuring generous interest free day policies, where you won’t be charged interest if you pay off your balance each month.

While credit card companies may have the power to raise and lower interest rates on their credit card offers, remember that it’s only you who decides what interest rates to accept.