Australian credit card types: Rates and Fees

Low Purchase rate credit cards

A low purchase rate is often the most sought after feature on a credit card. The purchase rate commonly referred to as the interest rate is the rate at which new purchases made with the card is charged at. The purchase rate quoted for a credit card can be either the ongoing rate or a special introductory rate. Ongoing rates usually range from 10% to 20% p.a whilst introductory rates can start from 0% p.a. Attractive introductory rates by virtue of their purpose will convert to a higher ongoing rate after the introductory period. For this reason comparisons made on purchase rates should be made using the ongoing rate to better reflect the long term costs of using the card, unless the expected usage of the card is only temporary. Credit cards with competitive purchase rates may have high annual fees and are more likely to be no frill credit cards with less reward features. These cards are best for people who don't want all the fancy extras but just a secure credit card that allows them to make credit purchases.

Low Cash Advance rate credit cards

Cash advances are usually charged at a rate much higher than the purchase rate. If you are expecting to make cash advances or cash withdrawals against your credit card balance, you may favour a lower cash advance rate over a lower purchase rate. Note however that cash advances do not usually accrue rewards points.

No annual fee credit cards

Annual fees reflect one of the largest costs of owning a credit card. For card users who make repayments on purchases inside the interest free period, the annual fee becomes the most significant cost of their credit card. No annual fee credit cards are thus very cost effective options. At the same time these cards tend to charge higher purchase rates and may have a shorter interest free period.

Gold and platinum Cards

One of the ways credit providers distinguish their credit cards is by separating them by the salary bracket of the card holder and their spending potential. Gold and platinum cards are reserved for moderate to high spenders and come with added benefits and privileges standard cards miss out on. These cards will usually have higher annual fees, higher credit limits, greater rewards and discounts, automatic travel insurance and so on. However the terms and features across gold and platinum cards vary widely between lenders.