September 20, 2018

What to consider when choosing a credit card in Australia

When well managed, credit cards, can be a convenient way of accessing your money. However, without considering how you will use the card and its conditions, you can end up paying a whole lot of money for nothing. Here’s a list of things to consider to compare credit cards in Australia and choose the most preferable one for you.

It's best to check the individual credit cards terms and conditions.

Card brand

Credit cards are accepted almost universally in Australia, but, not all credit cards cost the same to use. The credit card companies themselves charge businesses a fee to process credit card payments, regardless of which bank issued the card.

Visa and MasterCard are usually free to use; other major brands can charge a 1-2% fee on standard transactions. Although these cards offer greater rewards benefits, it is unlikely to offset paying 1% extra for everything.

Credit limit

Standard or basic credit cards have a lower credit limits than more ‘premium’ cards. However, they will usually also come with much lower fees. If you are a big spender, then you might need a premium card that offers a higher limit.

Annual Fee

Annual fees range from zero to hundreds of dollars depending on how ‘premium’ the card is. Generally, the more benefits, the higher the annual fee. The benefits usually come in a combination of reward points, travel insurance, concierge services, airport lounge passes, or dining discounts.

Interest rate

There is no ‘right’ interest rate for everyone, it really depends on how you will use the card. A high interest rate card with lots of benefits might suit someone who pays off their card every month, and therefore never pays interest. A low interest rate card could be useful if you intend to pay the debt back slowly.

The interest rate is relevant if you do not intend to pay your card off in full each month. Credit cards have a period, usually 55 day, in which purchase are interest free. However, if after this period the card is not paid off, interest is charge from the purchase date. It’s best to check the individual cards terms and conditions.

Other factors

  • If you intend to use the card overseas or purchase from overseas online, consider the international transaction and foreign currency charges.
  • Most banks offer interest free periods on balance transfers at some point during the year. If you already have a credit card debt then a balance transfer deal could be a good option.
  • Some banks offer free credit cards when packaged with a home loan or other products.

About the author  ⁄ Adrian Allwood

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