How to pick your first credit card

When you’re younger, financial decisions like credit cards are a far away concern. As you get older, it’s wise to consider all your options before deciding which one is right for you.

If you already have a debit card, picking a credit card should be simple, right? You do not necessarily need to use one that your main lender provides. In fact, it’s a good idea to shop around for a more competitive option.

It’s important to consider what exactly you need your first credit card for. If you can identify some key criteria your card must have, it’ll be a lot easier to choose between the many different types available.

I want a new wardrobe/phone/laptop etc.

Is there something you’ve been dreaming of and can’t wait any longer to have? Credit cards provide users with the ability to borrow and spend up to their maximum credit limit, which varies from card to card.

If you sometimes have trouble paying invoices on time, particularly for your first credit card, you’ll want to look for a credit card with a lower than average purchase interest rate (less than 18 per cent). The last thing you want to do is start to adversely impact your credit history.

You’ll also want to ensure you have the highest possible amount of interest free days (with the maximum being up to 55). It will also be beneficial to find a card with a high number of interest free days so you have time to pay your monthly invoices without incurring interest or late payment fees.

I want perks and rewards

Are you a big spender? Are you in a couple or large family and will have multiple card users? There are credit cards which will reward you for making transactions instead of using cash or your debit card through rewards programs. Depending on the rewards program, you could earn up to three points per dollar spent.

You could also earn bonus points for shopping at certain stores. The more you spend, the more you will earn. However, reward credit cards tend to have higher interest rates than standard cards, so these will benefit users who pay off their debt each month.

I want to travel

If you’re planning an overseas trip, choosing the right credit card can make a world of difference for avoiding overseas fees and charges. There are a multitude of different cards available and each will have different pros and cons depending on your criteria.

If you’re looking for complimentary perks, many credit cards offer travel insurance and a 24/7 concierge service as a part of their perks and reward programs. Your chosen lender will usually have a partnership with an insurance provider, and this can come in handy in case of any emergencies.

For a list of RateCity’s top travel cards for 2017, please read more here.

Compare credit cards