Compare first credit cards

The very first step you’ll want to take in your credit card journey is to familiarise yourself with the basics – aka the costs and features of a credit card. These include:

The next step you’ll want to make is to deepen your knowledge of what types of credit cards there are, and which may suit you best. 

Low-rate credit cards

As you may know, credit card interest rates can get fairly high. But if you pay your full card balance in full each statement period then you shouldn’t ever really accrue interest. However, if you think you may be the type of person who won’t always be able to pay their full balance off each time, it may be worth considering if a low-rate card would be a better fit for you.

Low-fee credit cards

If you are strict about budgeting and believe you won’t be charged interest on any outstanding card statements, then the biggest cost you may face is your annual credit card fee. Low-fee credit cards typically will not charge you this fee.

Platinum/premium credit cards

Designed for cardholders with larger incomes looking for higher credit limits and/or more comprehensive rewards. Platinum cards generally come with higher fees and interest. But it is expected that the cardholder can afford these costs, as they are marketed towards high earners.

Rewards credit cards

Earning rewards and chasing points is, for some Australians, what separates a credit card from your basic debit card. As mentioned above, these rewards can come in the form of standard rewards programs, frequent flyer programs or cashback offers.

Rewards credit cards are a popular choice for cardholders as you get more bang for your buck through points-per-dollar-spent earnings. But these cards also typically come with higher fees and costs, and stricter eligibility criteria.

Travel credit cards

These cards are designed with overseas spending in mind. This may mean anything from charging zero foreign transaction fees to offering complimentary insurance, including domestic and international travel insurance and/or rental car excess insurance.

Balance transfer credit cards

If you have an outstanding card debt, you may need a little no-interest breathing room to get on top of it. Balance transfer cards allow you to transfer the debt of one card to another, with the new card charging zero interest for a set period of months.

Once you know what features and fees are involved with credit cards, as well as what type might best suit your budget and financial situation, you’ll want to narrow down a shortlist of potential cards.

Instead of starting from scratch and googling ‘best credit cards,’ the simplest way to search for and compare credit cards is to use comparison tools, such as tables and calculators. 

Comparison tables, like the one on this page, allow you to enter the details of the card type you want, as well as filter features you want and fees you don’t. You’ll then be able to easily compare apples with apples by seeing a range of potential cards next to each other, and compare them based on their interest rates, number of interest-free days, annual fees and more.

Credit card calculators can also be helpful in showing you what potential card repayments may look like for your budget. If you put down the card limit you may receive as the ‘balance’, and add the interest rate, you may get a good idea of how much you’re looking to repay if you were to max out your credit card.

Now you’ve got a shortlist of potential first credit cards, you’ll want to double check that you meet the eligibility criteria before applying. This can help reduce your risk of being rejected. 

Here are some of the standard eligibility criteria for credit cards in Australia:

• Be at least 18 years old,
• Be an Australian citizen, permanent resident or hold a valid visa,
• Meet the minimum income requirement (can range from $15,000 - $100,000, depending on the card type),
• Meet the employment requirements (some providers may prefer full-time employees, and look favourably on those employed for at least 12 months), and
• Have a good or excellent credit history.

If you’re a young Australian with no credit history, there’s a chance that your card application may be rejected. This is because credit cards are a financial risk, and those with good credit history built up are less likely (in the eyes of the provider) to run up debt.

But how do you build credit history if you can’t get approved for credit?

There are ways to potentially grow your credit history without a credit card, including:

• If you’re financially independent, consider putting your phone plan and bill under your name.
• If you’re out of home, consider having your name on the energy and/or gas account and bills.
• Build your savings, as having a big nest egg may give card providers the impression that you’re responsible with your finances, and also have a good record of making regular payments into a savings account.
• Don’t make late payments, whether on your phone bill or on a car loan, as this may weaken your credit score.

 If you’re set on getting a credit card, but have little to no credit history, you could consider having a parent or family member go guarantor on your card application to help boost your chances of approval. The card provider will then look at their credit history, as well as their current debts and assets, and this may help to get you over the line. Just keep in mind that mixing money with relationships can turn sour if not carefully managed. You may damage your guarantor’s credit history if you then use your card to rack up a huge debt that you never pay off.

If, after you’ve read through this guide, you’re no longer sure you want to get a credit card, there are other options available. 

You may want to consider the following:

Debit cards

No, it’s not as “glamorous” as a credit card, but your standard debit card does give you access to your own money. This means you run less of a risk of racking up debt, as you’re only spending what you can afford. Plus, the eligibility criteria is much less strict, as pretty much anyone can apply for a bank account.

Buy-now-pay-later

If you’re just looking for a means to get one-off items, like clothing or furniture, you may want to consider buy-now-pay-later (BNPL) services like Afterpay or ZipPay. BNPL services allow you to break up the total cost of your purchase into smaller, more manageable sections that are paid off typically fortnightly. They also do not charge interest but may come with late payment fees if you miss a scheduled payment.