Credit Cards For Beginners

Information verified correct on June 30th, 2016

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 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. A good option 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 right 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 most competitive 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 will usually result in higher savings.
  • 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 June 30th, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
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. Go to site More info
American Express Essential Credit Card
Receive a $50 credit on eligible spend and get Smartphone screen insurance combined with a no annual fee for life card.
14.99% p.a. 0% p.a. for 12 months $0 p.a. Go to site More info
Coles Low Rate MasterCard
A low rate MasterCard with a competitive rate on purchases and a low annual fee.
9.99% p.a. 0% p.a. for 6 months $49 p.a. Go to site More info
NAB Low Rate Credit Card
The NAB Low Interest Visa Card offers 0% p.a. purchase and balance transfer offers for 15 months. Also comes with a low annual fee.
0% p.a. for 15 months (reverts to 13.99% p.a.) 0% p.a. for 15 months with a one off 2% balance transfer fee $59 p.a. Go to site More info
Commonwealth Bank Low Rate Credit Card
A $250 limited time cashback offer if you apply by 30 June 2016 and spend $500 on eligible purchases by 31 July 2016 and a low ongoing purchase rate.
13.49% p.a. 5.99% p.a. for 5 months $59 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 of 0% p.a. for 18 months.
1% p.a. for 12 months (reverts to 13.24% p.a.) 0% p.a. for 18 months $55 p.a. Go to site More info
NAB Low Fee Card
Get 0% p.a. on balance transfers and purchases for 15 months.
0% p.a. for 15 months (reverts to 19.74% p.a.) 0% p.a. for 15 months with a one off 2% balance transfer fee $30 p.a. Go to site More info
Bank of Melbourne Vertigo Visa Credit Card
Enjoy a low annual fee combined with 0% p.a. balance transfer offer for 18 months and 1% p.a. for 12 months on purchases.
1% p.a. for 12 months (reverts to 13.24% p.a.) 0% p.a. for 18 months $55 p.a. Go to site More info
ANZ First Visa Credit Card - Exclusive Offer
Take advantage of this exclusive offer and enjoy 0% p.a. for the first 12 months on balance transfers and 0% p.a. for the first 3 months on purchases.
0% p.a. for 3 months (reverts to 19.74% p.a.) 0% p.a. for 12 months $30 p.a. Go to site More info
St.George Vertigo Platinum
Enjoy platinum card benefits with a long term balance transfer of 0% for 20 months and a low annual fee.
1% p.a. for 12 months (reverts to 12.74% p.a.) 0% p.a. for 20 months $99 p.a. Go to site More info
ANZ Low Rate
Save on your existing credit card interest with 0% for 18 months on balance transfers with a low annual fee and low ongoing purchase rate.
13.49% p.a. 0% p.a. for 18 months with 3% balance transfer fee $58 p.a. Go to site More info
Commonwealth Bank Low Rate Gold Credit Card
Take advantage of the $250 cash back offer if you apply by 30 June 2016 and spend $500 on eligible purchases by 31 July 2016. A low rate card that comes with up to 55 days interest-free on purchases combined with complimentary international travel insurance.
13.49% p.a. 5.99% p.a. for 5 months $89 p.a. Go to site More info
Citi Simplicity Card
Enjoy a interest-free days and a low interest rate on purchases plus enjoy free bottles of wine from Citibank Dining Program. Offer ends on 31 March 2017.
11.99% p.a. for 24 months (reverts to 19.99% p.a.) $0 p.a. Go to site More info
Bankwest Breeze Platinum MasterCard
Enjoy Platinum card benefits offering no foreign transaction fees on online and overseas purchases, a cash back promotion and a balance transfer offer of 2.99% p.a. for 9 months.
12.99% p.a. 2.99% p.a. for 9 months $99 p.a. Go to site More info
BankSA Vertigo Visa
A low rate credit card with 0% for 18 months on balance transfers and low ongoing purchase rate from BankSA.
1% p.a. for 12 months (reverts to 13.24% p.a.) 0% p.a. for 18 months $55 p.a. Go to site More info
Citi Clear Platinum Card
Enjoy 0% p.a. for 9 months interest-free purchasing and 0% p.a. for 9 months on balance transfers.
0% p.a. for 9 months (reverts to 14.99% p.a.) 0% p.a. for 9 months $99 p.a. Go to site More info
BankSA Vertigo Platinum
Experience Platinum card benefits with complimentary insurance policies and 24/7 Visa Platinum Concierge Service. Get 0% for 20 months on balance transfers and 1% for 12 months if you apply by 29 September 2016.
1% p.a. for 12 months (reverts to 12.74% p.a.) 0% p.a. for 20 months $99 p.a. Go to site More info

No Annual Fee Credit Card Comparison

Rates last updated June 30th, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
American Express Essential Credit Card
Receive a $50 credit on eligible spend and get Smartphone screen insurance combined with a no annual fee for life card.
14.99% p.a. 0% p.a. for 12 months $0 p.a. Go to site More info
ME Bank frank Credit Card
A low interest rate on purchases and cash advances with $0 annual fee for the life of the card.
9.99% p.a. $0 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% p.a. for 18 months with 2% balance transfer fee. Spend criteria applies for cashback offer.
18.99% p.a. 0% p.a. for 18 months with 2% balance transfer fee $0 p.a. Go to site More info
Coles No Annual Fee MasterCard
No annual fee for the life of the card and earn 0.5 flybuys point for every $2 spent.
19.99% p.a. 0% p.a. for 6 months $0 p.a. Go to site More info
HSBC Platinum Credit Card
Receive a full annual fee refund and save $149 if you meet the $6,000 spend requirement. Enjoy a balance transfer offer and platinum card benefits such as complimentary insurances and concierge services.
19.99% p.a. 0% p.a. for 15 months $149 p.a. Go to site More info
ANZ Platinum Credit Card
Receive $200 back when you spend $500 in the first 3 months. Also enjoy a $0 annual fee for the first year with platinum card benefits.
19.74% p.a. $0 p.a. annual fee for the first year ($87 p.a. thereafter) Go to site More info
Coles No Annual Fee Platinum MasterCard
Enjoy a low balance transfer offer, upgrade to a platinum card and pay no annual fee.
19.99% p.a. 0% p.a. for 6 months $0 p.a. Go to site More info
ANZ First Student Card
An ideal credit card for students with 44 days interest-free on purchases with $0 annual fee in the first year. Access your account on the go with the goMoney™ app.
19.74% p.a. $0 p.a. annual fee for the first year ($30 p.a. thereafter) Go to site More info
Bankwest Zero Platinum MasterCard
Complimentary travel insurance and 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. Go to site More info
American Express Qantas Discovery Card
Earn up to 7,500 bonus Qantas Frequent Flyer points, plus take advantage of no annual fee for the life of the card. Earn 1 Qantas Frequent Flyer point per $1 spend.
20.74% p.a. 0% p.a. for 12 months with 1% balance transfer fee $0 p.a. Go to site More info
Citi Simplicity Card
Pay no annual fee to ever, plus receive access to complimentary purchase insurance and the Citibank Dining Program.
11.99% p.a. for 24 months (reverts to 19.99% p.a.) $0 p.a. Go to site More info
American Express Velocity Escape Card
$0 annual fee for life, earn 7,500 bonus Velocity points when you spend $300 in the first 3 months.
20.74% p.a. 0% p.a. for 12 months with 1% balance transfer fee $0 p.a. Go to site More info
Commonwealth Bank Low Fee Credit Card
No annual fee for the first year with low ongoing annual fee.
19.74% p.a. 5.99% p.a. for 5 months $0 p.a. annual fee for the first year ($29 p.a. thereafter) Go to site More info
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Credit Cards Comparison

Rates last updated June 30th, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
American Express Essential Credit Card
Receive a $50 credit on eligible spend and get Smartphone screen insurance combined with a no annual fee for life card.
14.99% p.a. 0% p.a. for 12 months $0 p.a. Go to site More info
HSBC Platinum Credit Card
Receive a full annual fee refund and save $149 if you meet the $6,000 spend requirement. Enjoy a balance transfer offer and platinum card benefits such as complimentary insurances and concierge services.
19.99% p.a. 0% p.a. for 15 months $149 p.a. Go to site More info
NAB Low Rate Credit Card
The NAB Low Interest Visa Card offers 0% p.a. purchase and balance transfer offers for 15 months. Also comes with a low annual fee.
0% p.a. for 15 months (reverts to 13.99% p.a.) 0% p.a. for 15 months with a one off 2% balance transfer fee $59 p.a. Go to site More info
HSBC Platinum Qantas Credit Card
Receive 40,000 bonus Qantas Points on eligible spend within 3 months. A balance transfer offer of 0% p.a. for 6 months with access to premium benefits and complimentary insurance.
19.99% p.a. 0% p.a. for 6 months $199 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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