Credit Card Types
Fortunately for Australians, competition between banks is so fierce that they have no option but to offer products that are of real value to consumers. Whereas the pool of finance was merely a pond generations ago, today the credit card choice is in your hands, and with free online credit card comparison, the choice is easier than ever.
Browse the different types of credit cards and find the one ideal for you.
It used to be that credit cards were very simple and straightforward, with each company issuing one card, and secured credit cards Australia not a part of the scene yet. Nowadays each card company offers multiple cards, each with its own features. This can get quite confusing when it comes time to apply for a card. The best way to handle this is to find out everything you can about the different types of credit cards available.
If you imagine yourself paying off your credit card balance almost every month without fail, and spending at least $10,000 or so on your card a year, then a rewards credit card is without a doubt the ultimate card type for you.
Reward program cards allow you to accumulate points every time you use your card. Rewards points can be cashed in for Cash, Petrol, Flights, Upgrades on Flights, Supermarket vouchers, electronics and many other items. They generally have higher interest rates as well.
Rewards credit cards allow customers to go shopping and collect points that they can use towards travel, merchandise and services. Each card has its own affiliate company, so you will need to shop around and find a card that offers points you can actually use.
Some of the types of Reward programs include:
- Petrol Credit Cards – These cards allow you to get discounts on your petrol purchases, all other items at the service stations and cashback on things you spend everywhere else. If you buy a lot of petrol and groceries then this card can save you a lot of money if it makes sense.
- Frequent Flyer Points Credit Cards – Are you a frequent international traveller? These cards allow you to accumulate credit card QFF points that can be redeemed for seat upgrades to business or first-class, pay for tickets or purchase other items on the Qantas Frequent Flyer Program.
- Cashback Cards – Cash is one thing that is great to get back on any credit card because it means you are getting a discount on whatever you buy. Cash is repaid back on your card at the end of each month.
- Supermarket Credit Cards – You gotta buy groceries! So you may as well save some money when you do it. With the Woolworths card you earn shopping cards that are immediately redeemable at Woolworths and the other related stores in their group. Example, To get a $20 shopping card you would need to spend:
- $3,448 at non Woolworths stores
- $1,724 at stores and groups related to Woolworths
- $1,149.33 at Woolworths itself
Reward Credit Card Offer
Accelerate your Qantas Frequent Flyer points with an ANZ Frequent Flyer Credit Card.Earn up to 1.00 points per $1 spent on purchases.
- $95 p.a. (which includes a $40 annual account fee and a $55 Rewards Program services fee) annual fee
- 19.39% p.a. on purchases
- Cash Advance Rate of 20.99% p.a.
- 44 days interest free
- Minimum Income Requirement of $15,000 p.a.
Gold&Platinum Credit Cards
These are a subset of rewards credit cards and generally have a little more Luxury, special services and travel insurance. Its important when selecting one of these cards to:
- Compare the rate at which you earn points – Some cards earn you more points faster for every dollar that you spend. E.g. $1 = 1 point vs $1 = 3 points (That is a better rate!)
- Cappings of points accumulation per month – Some cards cap how many points you can earn in a month, this might limit how many points you earn if you spend more than the cap each month. Try and balance your monthly spends with your points caps.
For instance, if you only earn 2 reward points for every $1 spent until $15,000 has been spent each year, you may find it necessary to go out of your way and spend until you’re capped. After that, you can tone down the spending as the rate of return would have typically dropped to 1 point for 1 dollar.
- When the points expire – Some cards points expire after a certain time period. This will force you to acquire points quickly before they expire to cash in something big. Try and get a card without expiry if you want to store you points up for a long time.
As far as reward programs go, the more it costs to maintain, the more benefits such as ‘no point expiry’ will be thrown in. Practically all gold and platinum cards feature no point expiry, whereas free programs like FlyBuys expire after 3 years.
- Its also important to consider how much a program’s points is worth when it comes to cashing them and or converting them into Qantas Frequent Flyer program points.
Gold and platinum cards require quite high credit worthiness although offer very high credit limits as a result of strict approval. Compare the Gold and Platinum credit cards here.
Frustrated that some things in life need a credit card, such as online purchases and over-the-phone bookings? If you’re the kind of person who will only use your credit card a few times a year, then a no annual fee credit card is most suitable.
Have further piece of mind as well knowing that a card with no yearly fee won’t charge you pesky annual fees.
Not paying an annual fee is great when you don’t use your credit card very much. these card are not for you if you are going to carry a balance on your card because you are going to pay up big with interest.
Ideal as a backup card or for people who just want to make online purchases but want to credit the cards before they make the purchases so that you don’t have to pay interest. There are a couple of catches and minor nuisances that may occur from no annual fee credit cards.
Low Interest Rate Credit Cards
Carrying a balance on your card? Know you are going to need to carry a balance for a while? Definitely consider getting the lowest rate you can possibly get on your card. Credit card interest can stack up quick and you don’t want to be stuck paying off your balance for the next 5 years, calculate interest repayments can be insightful.
These cards offer a lower than average interest rate so that customers can do their shopping without having to worry about high rates. Low rate credit cards are very beneficial if you want to make a large purchase but need some time to pay it off.
If you envision yourself using your credit card semi-regularly (a purchase every 10 days or so), and occasionally need time to pay off your purchases (which in this scenario are used for big occasions – holidays, hotels, Christmas etc) then a low interest card is your credit card choice. As your larger purchases need time to pay off, the clear solution is to minimise the repayments on a low interest rate.
Low Balance Transfer Credit Cards
A balance transfer is when you use one credit card to repay the debts on another credit or store card you already had. So, you now owe it the money instead, hopefully at a special cheap rate. Be careful with these but there are some nasty traps you can fall into that could make your debt worse.
These cards allow an individual to transfer a balance over from an existing credit card and pay a low interest rate, or no interest rate,he for a limited amount of time. Some cards have a 0% interest rate for six months, while others charge a low rate for a longer period. These cards give the consumer a chance to pay off their balance without having to worry about high interest charges being added to the balance on a monthly basis.
Some of the types of Balance Transfers include:
- .0% for 6 Months – This means you will payoff your old card or multiple cards with the new one and receive 0% interest on the new card for 6 months. After the 6 months
- 2.9% for 12 Months – 12 months balance transfers generally have a slightly higher interest rate than 6 months transfers.
- ‘For Life’ Balance Transfers – These transfers last for the rest of your life! This means you have your entire life to pay them off and your interest rate is fixed for life.
Cash advance rates are the interest rates you are charged when you withdraw cash from your credit card. Normal purchases are different to this as you will get a statement and will not be charged interest if you repay it before the interest free days period is up.‚ Cash advances therefore cost more although provide you with access to cash when you really need it.
Student Credit Cards – These cards are ideal for students and have special benefits to them. In general students receive a lower limit although get a lower annual fee.
Debit card allow you to use all the functionality of a credit card although use the funds in your bank account as opposed to borrowing money from a provider. These can be perfect if you are trying to not get into debt because you can only spend the money you have in your account, and you still have the access to make online purchases. Take care not to spend more than what’s in your savings account – if you do so, you will go into overdraft, and be hit instantly with a generally harsh two figure fee.
If you run a business and use a credit card you may as well get the best interest rate and earn as many frequent flyer points as possible!
Introductory Offer Cards
Banks tend to promote their flashy and ridiculously low introductory offers in order to encourage you to take advantage and apply for their card.
While their introductory offers are actually quality and real, it’s important to go over the fine print carefully. This way, you can find out where they can hope to gain some money off you after the promotional offer has ended.
The best promotional offers in the Australian credit card market currently are:
- Woolworths ‘Everyday Money’: $49 annual fee.
After the introductory offers have ended, the card remains a very impressive shopping rewards credit card, and reverts to 17.99% interest rate.
- Commonwealth Bank Low Rate: 5.99% p.a. for 5 months on balance transfers and a low rate on purchases.
Standard credit cards
These are the regular type of credit card that allow you to borrow a small amount of credit on a monthly basis, and have to pay interest if you cannot pay it back in full by the end of the month. These are in contrast to secured credit cards Australia that offer no credit whatsoever. With the standard cards there are different features available.
Secured credit cards Australia
When you apply for these secured credit cards Australia you will have to have some money that you can use as collateral. A security deposit is needed because there is no actual credit being given out with the card and no type of loan.
These cards are great for people that need to rebuild their credit and do not qualify for a regular card. They are also good for people that have been overspending and get into debt quickly with their credit cards. With a secured card you can only spend as much as you have as a deposit for the card.
When you look at standard cards and secured credit cards Australia, you can see that there have been great strides in credit cards over the years. Now almost anybody can have access to a card.
I’ve Found my Direction!
If you’re keen to cut straight to the chase, head to our best credit card comparison page to filter out the less-competitive offers in each card category and apply for the cream of the crop.
How to choose a credit card – Fido
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