Credit Cards For Beginners

Information verified correct on September 3rd, 2015

If you are about to apply for your first credit card, you may need some basic advice, so this article will provide a little information about credit cards for beginners.

You may be feeling a bit clueless regarding what to look for and what to avoid, but do not be disheartened. There are many individuals out there who have owned a credit card for ten or twenty years who still have no idea how to use them properly. So, here are the basics:

How Credit Cards Operate

Your credit card is a mini loan that you take out from the issuing bank each time you swipe it. Unlike writing a cheque or using a debit card, the money does not automatically come out of your account, but is actually borrowed from the issuer. You will then have to pay back the money within a short period, referred to as the interest free days, or you will be charged interest on the amount that you borrowed. This is where many consumers run into trouble. Instead of paying back their debt immediately, they only make a small payment which then causes them to be charged interest fees and increase their debt even if they are not spending.

The good thing about owning plastic is that you will have all of those funds available to you whenever you need it. It is kind of like taking out a line of credit at your bank, only you only pay for it if and when you actually use it. You could own a card for years and never pay a dollar in interest fees, if you managed it properly.

When it comes to convenience and security, there is really no better way to spend then on plastic. You can carry just one card, and maybe a back up, and travel all over the world. Most plastic is backed by globally accepted names like Visa, MasterCard, and American Express. You can spend in any currency and the transaction will be exchanged to Australian dollars. There are fees that apply for these foreign transactions, so be aware of them. Even if you never leave Australia, you can spend with your plastic virtually anywhere you desire.

Security is something that is taken very seriously by the financial industry. They have worked hard to develop fraud protection services that monitor your account and notify you of any suspicious charges. They also have the ability to freeze your account should you be a victim of loss or theft. These companies usually have zero liability policy that forgives charges that are deemed fraud. It is in their best interest to protect your finances and your identity and they do a good job. Ultimately though, you have to be responsible and smart to ensure that you do not fall prey to the fraudsters.

Getting And Using Your Credit Card

  • Choosing the right one – Choosing the right plastic can be a difficult decision. There are loads of options from all different financial institutions. They come with all different rates, benefits, and fees and are subject to different acceptance criteria. Your best bet is to think about how you will use your plastic and what features are important to you. For example, if you do not think you will use it often or only for emergencies, you might look for a no annual fee card.
    You might have a higher interest rate, but if the plastic is not used you could own it for free. Those who will use their cards a lot will either want one with a low rate if they will not pay if off in full each month or a good rewards program. Whichever one you choose, make sure it continually suits your needs and that you are not spending loads of cash to own it without getting a lot of value in return. Once you have picked the one you want, you can usually apply for it online and get a response in minutes. Your card will arrive in the mail within a week or so and you can start spending as soon as it is activated.
  • Interest rates – Interest rates are tricky so you need to pay close attention to how much you will be charged for your transactions. To begin with, when you see an advertised rate do not assume that it is the rate you will get. They usually advertise the lowest possible interest rate, but that is only available to people with a near perfect financial history. Once you apply, you will be awarded a rate that the issuer thinks is suitable, the better your credit history is the better rate you will get.You should also know that there are different rates charged for different transactions. You will probably have one rate for purchases, one for balance transfers, and another for cash advances.
  • Payments – The key to managing any plastic is making your payments on time each month. If you miss one or make a late payment, you will be hit with penalty fees and see your interest rate skyrocket. If you have a hard time remembering to make payments, you should consider doing a direct debit from your cheque account to your bill each month. That way you will never be late.Many consumers falsely believe that they can make only the minimum payment and still manage to get their bill paid off. This is a bad plan. The minimum payment will not send much to your principle balance so it could take years to pay off even a small debt. If you cannot pay your bill in full each month then pay as much as possible and try not to carry the balance forward for too long. Remember that the only way to take advantage of the interest free period is to have paid off your bill on the previous statement.Like most consumers, you probably want and need a credit card. There is nothing wrong with owning one as long as you understand how it works and are capable of managing it responsibly. The goal should be to only charge as much on it as you can afford to pay off at the end of each month. If you get behind, you should stop spending until you get the debt cleared, that helps to avoid getting into the debt spiral that lands so many consumers in trouble. If you can do that you can make the most of all the convenience, security, and other benefits of owning plastic without having to worry about the excessive costs.
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To Summarise:

Rule One: Compare

If you have bad credit history, then you may be limited to the type of credit card you can apply for, but being a credit card novice does not mean you can’t become an expert researcher to locate the best card for you. Only 6% of Australians surveyed in this year’s Australian Consumer Credit Card & Banking Survey went to a credit card comparison site before making their application. Nearly 60% only applied to their own bank. And yet the most important factor in choosing a credit card was deemed to be finding the best deal. If those facts seem at odds, they are. Credit cards for beginners Rule One: Compare the market.

Rule Two: Important figures

Assuming you are checking out the various credit cards on offer, there are certain factors that you must focus on. You may well like the colour of the credit card, and the hologram thingy, but these should not be the deciding factors. If you think that’s being facetious, bear in mind that in that same survey mentioned above, 14% thought credit card colour and branding was important.

  • Interest rates – This is the rate that will be applied to your account if you fail to clear your balance in full each month. This is not exactly the same as the APR (which includes any associated fees broken down over a year), but for all intents and purposes, you can count these as the same. Typically, rates range from 11% to 20%, where the lower figure is obviously best.
  • Annual fees – Australian credit cards usually carry an annual account maintenance fee, although there are some offers that waive this. $30 to $60 would not be unusual for a regular credit card, but you need to make sure the lower fee is not to compensate for a much higher APR. Which option you choose will depend on whether you honestly believe that you will be able to pay off your balance in full each month. If so, the interest rate won’t matter, so a low or zero annual fee would be preferable.

There will be other figures to baffle you, such as special introductory offers and balance transfer deals, but the key points for a novice are the two listed above. You will also see rewards schemes offered. If they add to the deal, great. If you have to compromise to get them, or pay an extra fee, then you’re focusing on the wrong things. Credit cards for beginners rule two: Cut to the chase; realise what matters most.

Rule Three: Be sensible

This is the rule that many veteran credit card holders break. They overspend. This is the surest way to create a big debt, and accumulate interest. Keep an eye on your spending and make sure you are always able to clear your balance at the end of every month. Credit cards for beginners rule three: Budget, know your limits, and stay within them.

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Comparison of Low Interest Rate Credit Cards

Rates last updated September 3rd, 2015
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee Cash advance rate (p.a.)
NAB Low Rate Credit Card
A credit card which offers a low rate introductory offer on purchases and a low annual fee.
0% p.a. for 12 months (reverts to 13.99% p.a.) 4.99% p.a. for 6 months $59 p.a. 21.74% p.a. Go to site More info
St.George Vertigo Platinum
A platinum card with a low interest rate on balance transfers and purchases with a low annual fee.
0% p.a. for 3 months (reverts to 12.74% p.a.) 0% p.a. for 20 months $99 p.a. 21.49% p.a. Go to site More info
St.George Vertigo Visa
A low rate shopping credit card offering a low ongoing rate on purchases plus a low balance transfer offer.
0% p.a. for 3 months (reverts to 13.24% p.a.) 0% p.a. for 18 months $55 p.a. 21.49% p.a. Go to site More info
ME Bank frank Credit Card
A low interest rate on purchases and cash advances with no annual fee charge.
9.99% p.a. $0 p.a. 9.99% p.a. Go to site More info
Coles Low Rate Mastercard
Enjoy a low annual fee credit card and a low interest rate. Receive $100 off a single Coles Supermarket shop.
12.99% p.a. 0% p.a. for 6 months $49 p.a. 19.99% p.a. Go to site More info
Citi Clear Platinum Card
Enjoy the benefits of Visa Platinum, with a low annual fee and a great introductory offer on purchases and balance transfers.
0% p.a. for 9 months (reverts to 13.99% p.a.) 0% p.a. for 9 months $49 p.a. annual fee for the first year ($99 p.a. thereafter) 21.74% p.a. Go to site More info
BoQ Low Rate Visa Credit Card
A credit card with a low annual fee, plus low rate on balance transfers and purchases.
13.49% p.a. 0% p.a. for 6 months $0 p.a. annual fee for the first year ($55 p.a. thereafter) 21.49% p.a. Go to site More info
Bank of Melbourne Vertigo Platinum
A platinum card with a low interest rate on balance transfers and purchases with a low annual fee.
0% p.a. for 3 months (reverts to 12.74% p.a.) 0% p.a. for 20 months $99 p.a. 21.49% p.a. Go to site More info
Bank of Melbourne Vertigo Visa Credit Card
A low purchase rate offer from Bank of Melbourne. Also benefit with other features including a low ongoing purchase rate and low annual fee.
0% p.a. for 3 months (reverts to 13.24% p.a.) 0% p.a. for 18 months $55 p.a. 21.49% p.a. Go to site More info
ANZ Low Rate
Save with a low rate on balance transfers with a low annual fee and ongoing purchase rate.
13.49% p.a. 0% p.a. for 16 months with 2% balance transfer fee $58 p.a. 21.74% p.a. Go to site More info
ANZ Low Rate Platinum Credit Card
Platinum card features including overseas medical and travel insurance together with a low interest rate on purchases.
13.49% p.a. 0% p.a. for 16 months with 2% balance transfer fee $99 p.a. 21.74% p.a. Go to site More info
St.George No Annual Fee
0% on purchases for the first 3 months and $0 annual fees, plus the added bonus of 12 months on balance transfer.
0% p.a. for 3 months (reverts to 20.49% p.a.) 0% p.a. for 12 months $0 p.a. 20.49% p.a. Go to site More info
Bank of Melbourne Amplify Signature
Offers a low interest rate offer on purchases and balance transfers when you apply and be rewarded on your birthday every year.
0% p.a. for 3 months (reverts to 19.49% p.a.) 0% p.a. for 16 months $279 p.a. 20.74% p.a. Go to site More info
Westpac Low Rate Card - Exclusive Offer
Exclusive Offer to finder.com.au
A low interest rate on everyday purchases and an exclusive long term balance transfer rate offer.
13.49% p.a. 0% p.a. for 20 months with 2.5% balance transfer fee $59 p.a. 21.49% p.a. Go to site More info
Westpac 55 Day Credit Card - Exclusive Offer
Exclusive Offer to finder.com.au
A low interest rate offer on balance transfers with $30 p.a. annual fee.
0% p.a. for 12 months (reverts to 19.84% p.a.) 3.99% p.a. for 6 months $0 p.a. annual fee for the first year ($30 p.a. thereafter) 21.29% p.a. Go to site More info
BankSA Vertigo Visa
A low rate credit card, with a low purchase offer from BankSA.
0% p.a. for 3 months (reverts to 13.24% p.a.) 0% p.a. for 18 months $55 p.a. 21.49% p.a. Go to site More info

No Annual Fee Credit Card Comparison

Rates last updated September 3rd, 2015
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee Cash advance rate (p.a.)
HSBC Platinum Credit Card
No annual fee for the life of the card. Earn points on everyday purchases and a balance transfer offer.
19.99% p.a. 0% p.a. for 8 months $0 p.a. 21.99% p.a. Go to site More info
American Express Velocity Escape Card
Earn Velocity points without paying an annual fee. 7,500 Velocity bonus points when you spend $300 in the first 3 months.
20.74% p.a. 0.99% p.a. for 6 months with 1% balance transfer fee $0 p.a. Go to site More info
ME Bank frank Credit Card
A low interest rate on purchases and no annual fee to pay.
9.99% p.a. $0 p.a. 9.99% p.a. Go to site More info
Westpac 55 Day Platinum Credit Card
Get a balance transfer offer of 0% p.a. for 16 months, 55 interest-free days on purchases with $0 p.a. annual fee for the first year.
19.84% p.a. 0% p.a. for 16 months $0 p.a. annual fee for the first year ($90 p.a. thereafter) 21.29% p.a. Go to site More info
American Express Qantas Discovery Card
Earn up to 7,500 bonus Qantas Frequent Flyer points, plus take advantage of the no annual fee offer. Earn 1.000 Qantas Frequent Flyer point per $1 spend.
20.74% p.a. 0.99% p.a. for 6 months with 1% balance transfer fee $0 p.a. Go to site More info
HSBC Credit Card
A no annual fee for the life of the credit card offer. Plus a low balance transfer offer. Also offers interest free finance at over 1,000 retailers across Australia.
17.99% p.a. 0% p.a. for 6 months $0 p.a. 21.99% p.a. Go to site More info
Coles No Annual Fee MasterCard
Receive $100 off a single Coles Supermarket shop, enjoy a low balance transfer offer and a no annual fee for the life of the card.
19.99% p.a. 0% p.a. for 6 months $0 p.a. 19.99% p.a. Go to site More info
Citi Simplicity Card
No annual fee with a long term balance transfer offer together with complimentary purchase insurance and Citibank Dining Program.
19.99% p.a. 0% p.a. for 6 months $0 p.a. 19.99% p.a. Go to site More info
BoQ Blue Visa Credit Card
Receive a balance transfer offer with a low annual fee.
20.74% p.a. 0% p.a. for 9 months $0 p.a. annual fee for the first year ($60 p.a. thereafter) 21.74% p.a. Go to site More info
Bankwest Zero Platinum MasterCard
Complimentary travel insurance & 24/7 Concierge service and $0 Foreign Transaction fees. Plus enjoy a $0 annual fee.
17.99% p.a. 2.99% p.a. for 9 months $0 p.a. 21.99% p.a. Go to site More info
ANZ Frequent Flyer
Receive 25,000 bonus Qantas Points with $0 p.a. annual fee for the first year and earn 1.00 points per dollar spent.
19.99% p.a. $0 p.a. annual fee for the first year ($95 p.a. thereafter) 21.49% p.a. Go to site More info
BoQ Low Rate Visa Credit Card
A low ongoing purchases rate and no annual fee for the first year.
13.49% p.a. 0% p.a. for 6 months $0 p.a. annual fee for the first year ($55 p.a. thereafter) 21.49% p.a. Go to site More info
Westpac 55 Day Credit Card - Exclusive Offer
Exclusive Offer to finder.com.au
A low interest rate offer on balance transfers with $30 p.a. annual fee.
0% p.a. for 12 months (reverts to 19.84% p.a.) 3.99% p.a. for 6 months $0 p.a. annual fee for the first year ($30 p.a. thereafter) 21.29% p.a. Go to site More info
ANZ Platinum Credit Card
A low annual fee credit card with overseas travel and medical insurance.
19.74% p.a. 0% p.a. for 16 months with 2% balance transfer fee $0 p.a. annual fee for the first year ($87 p.a. thereafter) 21.49% p.a. Go to site More info
Woolworths Money Everyday Platinum Credit Card
0% p.a. for 14 months on balance transfers and earn up to 3.00 rewards points per $1 spent with $0 annual fee and receive a $100 Gift Card, offer ends 31 October 2015.
19.99% p.a. 0% p.a. for 14 months $0 p.a. annual fee for the first year ($49 p.a. thereafter) 21.99% p.a. Go to site More info
ANZ Frequent Flyer Black
Earn up to 75,000 Qantas points when you meet the minimum spend requirement and no annual fee in the first year. Conditions and minimum spend apply.
19.99% p.a. $0 p.a. annual fee for the first year ($425 p.a. thereafter) 21.49% p.a. Go to site More info
28 Degrees Platinum MasterCard
No annual fee, up to 55 days interest free on purchases and no foreign transaction fees.
20.99% p.a. $0 p.a. 20.99% p.a. Go to site More info
Virgin No Annual Fee Credit Card
No annual fee credit card with $100 cashback and a long term low rate balance transfer offer of 0.9% p.a. for 15 months. Spend criteria applies for cashback offer.
18.99% p.a. 0.9% p.a. for 15 months $0 p.a. 20.99% p.a. Go to site More info
Citi Ready Credit - Fixed Payment Option
A special introductory Fixed Payment Option from rate for months, plus no annual fee.
*establishment fee of $99
8.99% p.a. for 48 months (reverts to 19.49% p.a.) $0 p.a. 19.49% p.a. Go to site More info
ANZ First Student Card Offer
A great card for students, with a no annual fee offer for the first year.
19.74% p.a. $0 p.a. annual fee for the first year ($30 p.a. thereafter) 21.49% p.a. Go to site More info
Citi ReadyCredit
A long term balance transfer offer of 6.9% p.a. for 36 months with no annual fee.
19.49% p.a. 6.9% p.a. for 36 months $0 p.a. 19.49% p.a. Go to site More info

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Credit Cards Comparison

Rates last updated September 3rd, 2015
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee Cash advance rate (p.a.)
St.George Vertigo Platinum
A platinum card with a low interest rate on balance transfers and purchases with a low annual fee.
0% p.a. for 3 months (reverts to 12.74% p.a.) 0% p.a. for 20 months $99 p.a. 21.49% p.a. Go to site More info
NAB Low Rate Credit Card
Low ongoing interest rate on purchases and balance transfers.
0% p.a. for 12 months (reverts to 13.99% p.a.) 4.99% p.a. for 6 months $59 p.a. 21.74% p.a. Go to site More info
American Express Velocity Escape Card
Enjoy 7,500 bonus Velocity Points when you spend $300 within the first 3 months and up to 2.00 points for every dollar you spend, together with a $0 annual fee. Offer ends on 30 September 2015.
20.74% p.a. 0.99% p.a. for 6 months with 1% balance transfer fee $0 p.a. Go to site More info
HSBC Platinum Credit Card
Earn rewards points plus a balance transfer offer. Access to Platinum benefits including a personal concierge service and VISA Platinum reward program.
19.99% p.a. 0% p.a. for 8 months $0 p.a. 21.99% p.a. Go to site More info
Citi Rewards Credit Card - Platinum Card
Consolidate your debt with a low balance transfer of 0% p.a. for 24 months and a long purchase rate offer plus a host of platinum privileges. Earn up to 1.25 Citibank Reward points for every $1 spend.
20.99% p.a. 0% p.a. for 24 months with 1.5% balance transfer fee $199 p.a. 21.74% p.a. Go to site More info
Bank of Melbourne Vertigo Visa Credit Card
One of the lowest rate balance transfer deals combined with a low on-going purchase rate.
0% p.a. for 3 months (reverts to 13.24% p.a.) 0% p.a. for 18 months $55 p.a. 21.49% p.a. Go to site More info

* The credit card offers compared on this page are chosen from a range of credit cards CreditCardFinder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing cards.

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