Different credit cards better suit different spenders, so it’s crucial that you compare a range of options if you’re in the market for a credit card in Australia.
Some of the key factors to consider when shopping around for your best credit card include:
Purpose
How do you plan on using your credit card? For example, is it for:
- everyday shopping?
- major purchases only?
- international transactions?
- travel?
- transferring an existing balance?
- business use?
The best credit card options may vary depending on your needs, so identify your card purpose to easily compare apples with apples.
Interest rates
Credit cards can charge different rates for purchases, cash advances (withdrawing cash from the ATM with your credit card) and balance transfers. Also, keep an eye out for discounted introductory, promotional, or “honeymoon” rates that revert to a higher rate after a set period (typically the first year). Knowing what rate you may be charged before applying could help you better manage your credit card debt.
If having a low interest rate is a priority for you, you can sort your results on a credit card comparison table to show you the lowest interest rate options first. Strict eligibility criteria will apply for each card, but this is one way you can quickly find and compare some of the lowest-rate credit cards on the RateCity database.
Card fees and charges
Some credit cards charge a range of fees to cardholders. Consider whether the credit card’s benefits would likely be worth these costs. Some of the most common fees include:
- Annual fee: Can range from $0 to $1200 depending on the credit card status tier and the card issuer. Make sure to weigh up whether the card’s benefits and other perks are worth the cost.
- Cash advance fee: When you withdraw money at an ATM, you might have to pay a fee, as well as be immediately charged interest on that transaction amount at a higher rate.
- Late payment fee: If you don’t make your minimum repayment on time each month, you may be charged a late payment fee.
- Overseas fees: Currency conversion fees, foreign transaction fees and foreign ATM charges could apply to international transactions, even if you’re not travelling and are simply shopping with overseas businesses.
Some cards offer a low interest rate or interest-free period for a limited time after you sign up. Keep in mind that this interest rate can rise steeply after the introductory period expires.
Interest-free periods
The number of days allocated to pay your credit card balance before you’re charged interest on your purchases at the card’s purchase rate. The higher the number of days, the more breathing room to make repayments. A typical interest-free period is around 44-55 days.
Rewards programs and frequent flyer programs
Rewards card programs let you earn points on your everyday spending that can be exchanged for goods, converted into frequent flyer points, or redeemed for cashback deals. You’ll want to carefully compare the types of rewards the card issuer offers to ensure it meets your specific needs and goals.
Some of the most common rewards associated with credit cards include:
- Travel rewards: Frequent flyer points to put towards flight upgrades, airport lounge access, travel insurance, accommodation, etc.
- Merchandise: Rewards points to put towards items such as electronics, appliances and event tickets.
- Cashback: Points you can redeem for cash, usually credited back to your account.
- Gift cards: Department store vouchers, fuel vouchers etc.
- Events: Exclusive access to pre-sale tickets, discounted tickets, VIP event access, etc.
Some credit cards also offer extras like not charging a fee for supplementary cards for additional cardholders. The more rewards and extras a credit card offers, the more likely you may need to pay higher annual fees.
Credit card status tier
There are different credit card tiers that customers may be approved for, ranging from the more basic options with smaller credit limits, through to platinum credit cards for bigger spenders, and even black credit cards for rockstars and royalty. The status of a credit card may be listed as a colour, such as a gold credit card, or it could be branded with a name from the issuer.
These different credit card status tiers, may better suit different types of spenders:
- Basic low rate and low fee credit cards: Your standard entry-level offering which typically comes with a lower interest rate, more accessible eligibility criteria and lower credit card limits. May be a useful first credit card.
- Mid-tier credit cards: May offer a competitive purchase rate, plus perks like rewards points and complimentary travel insurance, but may also charge higher annual fees of around $100-$200+.
- Premium credit cards: Platinum credit cards that offer a range of perks and benefits, from rewards programs to frequent flyer bonuses and concierge services. Applicants are typically offered higher credit limits, but may need to have higher incomes and meet spending minimums each year. These cards typically come with much higher annual fees, but it is expected that applicants can afford these.
Credit card type
There are three main credit card types: Visa, Mastercard and American Express (Amex). Visa and MasterCard are quite similar in that they are payment processing systems, and cannot issue cards directly to customers. Whereas Amex is both a payment processing system and a credit provider that can issue its own cards. Visa and MasterCard typically carry lower card fees than Amex.
