Each person has their own specific needs when it comes to finances and it’s important to match the right credit card with your credit card needs.
Everyone uses their credit card differently. One person might only want a card for emergencies while another may choose to pay for absolutely everything with their plastic. Some people are use their cards to earn rewards while others use them to get out of debt or control their spending. Regardless of how you plan to use your card, the truth is they’re very handy. They can be useful to reserve hotel rooms and shop online. And even though Australia lacks some of the credit card offers we’ve seen overseas, there’s bound to be a card to suit your lifestyle and budget.
Australian credit cards come in all different shapes and sizes. It still pays to be aware of what types of credit cards are available here and how they’re used.
Low Interest Rate Credit Card
Enjoy a low rate balance transfer offer. The card also features a low ongoing purchase rate and a low annual fee.
- $55 p.a. annual fee
- 1% p.a. for 12 months (reverts to 13.24% p.a.) on purchases
- 0% p.a. for 18 months on balance transfers
- Cash Advance Rate of 21.49% p.a.
- Up to 55 days interest free
Comparison of Australian Credit Cards
What type of Australian credit card is *best for you?
Before you can choose the right piece of plastic for your wallet you have to know what it is you want from your card. Part of figuring this out is understanding your own spending habits and your budget. Most cardholders fall into a few categories. By answering a few simple questions you can determine which type of spender you are and then which kind of card would suit your needs.
- Are you only going to use your credit card for emergencies?
Even though card use is convenient and secure, some people are most comfortable using cash to pay for everything possible. If this describes you then a credit card that costs little to own, like a no frills and no annual fee option may be an ideal choice.
- Are you going to put everything on your card and pay it off each month?
Those who will take the route of building up and paying off their debts regularly can earn big benefits with rewards cards. You can compare rewards cards on this page. They can cost a bit in the way of annual fees so be sure to check this out when comparing. If you’re paying your balance in full each month, the purchase rate of interest will also be of little consideration due to interest free days. There’s a number of interest free day offers with credit cards – from up to 44 to 65 interest free days on purchases. If you pay your balance in full each month, you won’t get charged interest on purchases you’ve made with the card.
- Do you think you will revolve your balance from month to month?
One of the biggest costs of using plastic are the rates of interest on purchases and cash advances. Each month you will incur interest on the remaining balance. As the debt revolves you will be charged interest on your total balance which may include the interest you were charged in previous months. Those who anticipate revolving a balance will get the most benefit by using low interest credit card option.
- Do you have old card debt that you are paying high interest on each month?
One way to relieve your debt is to get a balance transfer deal. These cards offer low interest rates for an introductory period of time. A balance transfer deal allows you to pay down the debt at a much lower cost because of this reduction in interest. The lower cost will also lead to paying off your balance faster, which can save even more money.
Types of Australian credit cards
Understanding the type of spender that you are is only the beginning of your search for the right credit card. Even if you say that you want a no annual fee card there are loads of different options within that type of card. Along with knowing the type of card that you would like to own you also need to familiarise yourself with the terms and potential options from different issuers. That way you can get the right type of card from the right company that is perfect for your needs.
No annual fee card
It might sound pretty simple and straightforward but the words ‘no annual fee’ have a few different meanings in the world of credit cards. There are some that actually mean no annual fee ever for the life of the credit card. These cards are a good choice if you’re not spending much or will spend, but pay off your debt each month. They tend to have higher interest rates to make up for the lack of an annual fee so if you will revolve a balance they are probably not the best financial choice.
There are also some products that have a promotional discounted or waived annual fee for just the first year. If you choose this option make sure that the fee will revert to something reasonable and that the card is worth owning once you have to start paying that fee. A third type of no annual fee plastic is the special offer variety. This is when your annual fee is waived if you meet specific criteria. It may be once you meet a certain spending minimum or if you have a linked account from the issuer. Make certain that you can meet the requirements without adding cost to your bottom line if you choose this type of no annual fee deal.
What characteristics does a no annual fee card have?
A no annual fee is usually a low cost card with minimal features. Here’s what you can expect with a no annual fee credit card.
- No rewards programs
- No perks like complimentary insurance and
- Can have less interest free days.
The rewards card is one of the most prestigious but often misunderstood of all forms of plastic. A lot of consumers think that owning one is a simple process of spending and earning points and then reaping all sorts of fancy perks. While this is mostly true there are also some drawbacks to these that you should be aware of before you put one in your wallet.
The first thing to note is that in most cases in order to get big rewards you also have to spend big money. Not only will the card that has the better rewards redemption options be more expensive in terms of the annual fee you will also have to spend a lot to get anything measurable in return. It’s estimated that the average consumer needs to spend approximately $20,000 per year in order to offset the cost of owning their card in terms of rewards value. That is a significant amount of spending, however if you can do it there are some pretty great benefits.
Rewards can be anything from cash backs to gift cards to frequent flyer miles depending on which card you choose. Gold or platinum cards usually have added benefits like complimentary travel insurance, purchase cover, and concierge services too.
What characteristics does a rewards card have?
Rewards cards are generally feature-heavy cards. Here’s what you can expect with a rewards credit card.
- A higher annual fee
- The possibility of bonus points on sign up
- Generally a higher required income than a low interest or no annual fee card and
- Complimentary insurance policies.
Low interest card
Many consumers go for a card in this category because a great number of us do not pay our bill in full at the end of each month. Instead, we use the credit card as a form of financing and make purchases that we know we will need a month or two to pay off. If you’re this type of consumer then you should first consider cards with a low interest rate.
By getting the lowest possible interest rate you can, you can finance your purchases at a lower cost and save more of your money. While these cards might have a bit of a higher annual fee it’s usually worth it to get an ongoing low interest rate. Like the no annual fee choice they don’t usually come with many added benefits and perks. Also, be sure to note if the low interest rate is standard or if it’s merely an introductory offer. Those introductory offers can be great in the short term, just make sure your ongoing rate remains low so you do not wind up deep in debt.
What characteristics does a low interest card have?
Low interest cards are similar to no annual fee cards in that they are low cost, minimal-feature cards. In general a low interest credit card will have:
- A high number of interest free days each statement cycle
- Low or discounted annual fees and
- No complimentary insurance policies.
Balance transfer card
If you have never heard of a balance transfer then you might be missing out on one of the cheapest and easy ways to clear out high interest debt. The premise is simple, you transfer the debt from one or several cards to a new card that has a lower interest rate for a limited time period.
By doing this you are able to start paying down your debt faster because more of your payments go to the principle instead of just to interest fees. There are many different levels of balance transfer deals based on the interest rate and the length of time that rate lasts.
Typically the lower the rate the shorter the term. For example, many zero percent balance transfers last between three and six months. Generally, as the interest rate increases, so does the balance transfer promotional period.
To decide which one is ideal for your situation you first have to consider how much time you will need to completely pay off your balance and then look for the offer with the lowest interest rate for that length of time.
A balance transfer card can be tricky, so your best bet is to use it for nothing other than the initial transfer until the balance is paid off. Also, be sure to always pay your bill on time or you might wind up having that great interest rate withdrawn.
What characteristics does a card with a balance transfer promotion have?
A card with a balance transfer rate can come from any of the above categories. Balance transfer offers are generally used as an incentive, so it’s possible that many cards, from platinum or gold, to rewards cards and low interest cards can features a balance transfer offer.
Using an Australian credit card
An Australian credit card can be used in stores, over the phone or online, making them very versatile. It should be noted that this same versatility can be found on a debit card, so if you’re looking for a way to use your own money with the same flexibility as a credit card this could be your answer.
Australian credit cards can also be used for:
- Paying bills - Many credit cards allow you to use BPAY to pay your bills. BPAY is a bills payment system which allows you to pay bills over the phone or the internet.
- Paying bonds for hotel stays - Often a credit card will be used as security for a hotel when staying in one of their rooms. This ensures that if the room is damaged or there are any unpaid charges, they can still receive payment.
- Getting complimentary insurance when travelling Many platinum or gold credit cards offer complimentary travel insurance when going overseas or even travelling domestically.
Generic features of an Australian credit card
An Australian credit card has some basic features which you should get to know,this is how you will ensure you get the most out of it.
- Card number - This is your personal card number, and is used to identify your account when making payments or enquiring about your account with your bank.
- Security PIN - A security Personal Identification Number (PIN) is used as an alternative to signing your name, and is the number needed to authorise a payment using your card.
- Security chip - This is the metallic chip located on the front face of your credit card, and securely holds your card details.
- Signature strip - This is usually found underneath the magnetic strip on the back of the card, and is used by merchants to ensure your signature is correct when signing for a payment.
- Magnetic strip -This is the strip found on the back of the card, and is used when swiping the card to make a purchase. It also holds your card details, but is widely seen as less secure than a security chip.
Start a comparison today
Knowing what’s in the credit card market means you’re better positioned to choose the right card when you need one.
Keep up-to-date with current offers and compare the cards in your chosen category today. This will help your finances work for you.Back to top