Q. Tell us a little bit about yourself and your business.
A. My name is Andrew Boyd. I live in the UK with my wife and young family. In 2008 I co-founded CreditCardCompare.com.au with my brother David, who lives in Australia. Since launching, it has grown to become one of the top three credit card comparison websites in Australia. I’m still struggling to come to terms with the fact that we’ve been doing this for five years now!
Q. Why Australia? Why not the UK or somewhere else?
A. Back in 2008, David was working for a marketing agency in Sydney and noticed that there was a gap in the market. With us both coming from the UK, we were well aware of the growing trend for consumers going online to research, compare and buy all sorts of products and services. However, at the time that trend was still very much at the nascent stage in Australia. We saw an opening and we went for it. In hindsight, we would probably have chosen a different marketplace.
Q. Considering your success, that is a bit surprising. Why?
A. Even though things have progressed in Australia, habits there die hard. It’s common for Australians to stick with the same bank all their life. Their parents set them up with an account as a kid and even though they be far from the cheapest, they just don’t move for several reasons, but primarily because of the hassle involved. So even though we may be able to help consumers save a lot of money, we’re constantly fighting an entrenched, unreciprocated and often unwarranted consumer loyalty towards the banks.
Q. What are the main differences between the Australian and American markets?
A. Scale is the obvious one. There are about 320 million people in the USA versus approximately 23 million in Australia. In terms of our business, there is a limited addressable market. In terms of credit card offers, what’s available in the USA is much, much better.
Q. When you say better, how much better?
A. Here’s an example. At the minute, ANZ (one of the biggest banks in Australia) are offering 0% for 9 months on balance transfers with their Low Rate MasterCard. This is about as good as you’ll get, and there aren’t many others with similar offers. Compare that to 0% for 18 months for balance transfers and purchases with the Citi Diamond Preferred card and it doesn’t take a genius to see who wins. The market is so much larger and more competitive, so the American banks have to step it up if they want to compete.
Q. Is it all bad for Australian consumers?
A. One of the areas where they have it better than pretty much anywhere else is with balance transfer fees. In Australia it is unusual to be charged an administration fee just to transfer a balance. In the UK or USA, the vast majority of balance transfer offers come with a fee of 2 – 5%, which adds up when you’re transferring a large balance.
Q. What similarities exist between the two markets?
A. Broadly speaking, they are very similar. Balance transfer offers are perennial favourites. Rewards programs, particularly those linked with an airline, are particularly popular in Australia as they are in the USA. I suppose one reason for that is their relative geographic isolation – if you want to do business, you have to fly. Australian consumers, like their American counterparts, are quite clued in about earning points on their spend. Cash back offers, which are extremely popular and widespread in the USA are strangely missing in action in Australia – consumers are more interested in low rates and fees. In fact, just recently Citi Australia pulled their fuel cash back card from the market completely.
Q. Do consumers in Australians use their cards like their American counterparts?
A. Very much so. We did some analysis of a questionnaire we carried out last year and found some interesting points. According to our research, 57% of respondents have been hit late payment fees, 40% think they spend too much on interest and 39% carry a rolling balance. It’s not surprising that Australian household debt is as high as it is.
Q. Do you feel uneasy running a credit card comparison website? Are credit cards evil?
A. I’ve thought long and hard about that. No. I don’t. There’s an old adage: a bad tradesman will blame his tools. The same principle, in my opinion, applies to credit cards. They are inanimate objects. They don’t just go out and decide to buy everything in sight. It’s the card holder that gets themselves into trouble. But we know that many people are hurting financially, which is why we try to make it as easy as possible to find cheaper deals. When I look at our blog, it feels like we never stop repeating the importance of getting out of debt. We walk the walk too. Our business is debt free and bootstrapped from the ground up, so we know what it’s like to control spending and stay out of debt.
Q. Do you have any websites or tools you would recommend to readers?
A. Absolutely! Everyone knows about Mint – it sparked a revolution in managing money. There’s a great tool called Pocketbook based in Sydney that does the same for Australians. I would also highly recommend small business owners check out either Xero or FreeAgent – both are great ways to manage your business finances. As you can see, I like my tools. David and I also both subscribe to Dave Ramsey’s podcast, even though he would probably be against a site like ours.
Thanks again to Andrew for agreeing to do this interview. We hope you enjoyed it! Feel free to leave a comment below!