Ways to Know You’ve Chosen the Wrong Credit Card

Information verified correct on October 25th, 2016

Breaking up is hard to do, but sometimes it is still beneficial when you and your credit card go your separate ways.

In the modern world, most of us have at least one credit card in our wallet. These cards have revolutionised the way we make payments because of their ease of use and convenience. As well as being used for everyday purchases, credit cards are important during emergencies. Whenever you urgently need some cash to sort out a mess, you can use a credit card to save the situation.

For making online payments, credit cards can take care of any number of transactions simply and quickly. When going on trips, credit cards give you the convenience of making payments without the need to carry colossal amounts of money or convert cash into different currencies.

Finally, credit cards also enable you to build a credit history and increase your chances of getting loans from banks or other financial institutions.

How does a credit card work?

After you’ve applied for a credit card and your application gets accepted, you’ll receive a card in your name. The card will come with a set credit limit, which is the highest amount you are allowed to borrow at any occasion. You should always strive to avoid building up a debt that exceeds this limit. If you have any outstanding payments not completed by the due date, they will be carried over to the next payment period.

When you’ve started using your card, you will be given monthly statements indicating your record of expenses. You can choose to pay off the entire amount borrowed, a fraction of it or the minimum amount. If you are unable to pay off the balance on your statement within a given amount of days, you will be charged interest on the outstanding balance. Paying your entire outstanding balance each month will ensure you are not charged any interest at all.

Credit cards can be used for a wide range of purchases, including everything from clothing or holidays to everyday expenses like groceries.

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Why you might need a credit card

  • Access to credit. With this little piece of plastic, you can get money to purchase products and services that are not within your immediate budget. However, you will need to pay back the cash you have borrowed through the credit card.
  • Avoid many hurdles when travelling. When travelling, you will need to make several payments such as booking your flight, renting a car and reserving a hotel room. If you have a credit card, you will be able to make purchases conveniently without many hurdles.
  • Secure method of payment. Credit cards are powered by top-notch technology and if you lose them, they can be cancelled quickly. On the other hand, if you lose money or your wallet, there is little you can do. Most credit cards also offer additional protection if purchased items go missing, get broken or are stolen.
  • Suitable for emergencies. In times of emergency when money is not readily available, credit cards help people to meet their urgent financial needs.
  • Build a credit history. Having a credit card and promptly paying back your balance will improve your credit rating. If you want to borrow larger amounts in the future, it will be easier for a bank to approve your request.
  • Earn rewards. Some credit cards will allow you to earn points each time you make payments. You can be able to redeem these points for an extensive variety of products and services.
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Who are credit cards not meant for?

For most people, a credit card is an essential part of their wallet. Just like with any other thing in life, however, credit cards are not meant for everyone—in fact, some people are better off not having any credit cards. If you have any of the following bad behaviours, you should probably not apply for a credit card until you have worked on them.

  • Lack of money management skills. If you cannot account for how you spend your money, having a credit card will just add to your financial woes. The habit of failing to manage your money and engaging in overspending will quickly get you into trouble if you have a credit card.
  • Poor bill-paying habits. Poor bill-paying habits, such as failing to pay your bills in time, will lead you to incur late payment and additional interest charges when using a credit card. Credit cards also affect your credit history and if you don’t use them correctly, you will tamper with your credit rating. If you don’t care when you pay bills late, amend this habit first before applying for a credit card.

Credit Card Rejects

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How to know if you’ve chosen the wrong credit card

The world of credit cards is littered with so many different cards to choose from, so finding the right one for you can often be a confusing task. Some offers may be more appealing on the surface than they are when you read the fine print, while sometimes you don’t understand just how wrong a card is for you until you start using it and realise that all that glitters is not gold. So, how do you know you’ve chosen the wrong credit card? Here are a few important guidelines to consider.

  • High interest payments. If the interest rate on your credit card is unmanageable, it’s not the right card for you. Shop around for a credit card that offers low interest rates to save you the most money.
  • Your credit card company milks charges for going overseas. If you take a trip abroad with the wrong credit card, you could find that you will be making your credit company rich instead of paying for what you really deserve. Most credit cards will hit you with three charges when travelling overseas—a foreign exchange fee, transaction fee and a cash withdrawal fee. You should go for a credit card that limits these extra fees when used abroad.
  • Stagnant offers for years. In the ever-changing and competitive credit card world, what was an attractive offer last year may not be competitive this year. If your credit card company doesn’t change with the times, it means you might need to look for a better deal.
  • Does the credit card serve its primary use? Your credit card should effectively meet the primary needs which prompted you to apply for it in the first place. For instance, if you need a card to take charge of your debt via a balance transfer, it should always have a low balance transfer rate.
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Credit cards have revolutionised how we make payments, and when you end up with the right one in your pocket it can be a useful tool for securing your financial future. If you have the wrong card, however, you could be doing nothing but making your credit card company rich.

Getting the right credit card is essential to keep you out of financial difficulty. Here are some important points to remember to help you find the right card for your needs.

  • Does the card suit your lifestyle? To get the right credit card, always go for the one that matches your lifestyle. If you are a constant traveller, choose a card that gives you travel discounts and cheap access to global travel clubs. If you just want a card for everyday purchases, look for one with a low purchase rate and minimal annual fee.
  • Low-interest-rate credit cards. When shopping for a credit card, go for the one with the lowest interest rate. Credit card interest rates are critical because they determine how much you will be charged for using plastic.

Low-interest-rate credit cards

  • Fees and charges. The ideal credit card is the one that charges minimal or no fees at all. If a credit card charges high membership fees, annual fees, processing fees or any other fee, you may not be able to maximise your savings and monthly repayments. Make sure the fees on a card are counterbalanced by the rewards or perks it offers.
  • Rewards program. Enjoying free airline miles, purchasing items at discounted prices and other reward offerings can help you make the most of your credit card spending. You should compare various credit cards before choosing the one with the ideal rewards program.

Reward Credit Cards

  • Promotions. You might want to take advantage of some of the promotions offered by credit card companies, such as a 0% p.a. purchase rate for six months or a reduced rate on balance transfers.

A credit card is an important financial tool that offers you an easy and convenient way to make purchases. If you choose the wrong credit card, however, you may not be able to fully enjoy its benefits. As such, it’s important that you shop around and compare your options before deciding on the right card for you.

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Credit Cards Comparison

Rates last updated October 25th, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
Enjoy a 0% p.a. balance transfer offer for 18 months and also earn 2 bonus Velocity Points in the first 3 months on everyday spend.
20.74% p.a. 0% p.a. for 18 months $64 p.a. annual fee for the first year ($129 p.a. thereafter) Go to site More info
ME Bank frank Credit Card
Enjoy a low and consistent interest rate on purchases and cash advances, combined with no annual fee.
11.99% p.a. $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 Rate Card offers 0% p.a. on purchases and balance transfers for 15 months. This card 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 3% balance transfer fee $59 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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