The lowest rate credit cards in Australia are designed for people who sometimes carry a balance on their cards and…
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Updated on 18 May, 2022
Finding the right credit card isn’t as easy as just choosing a VISA® or MasterCard® with a low rate or large credit limit. With hundreds of credit card options available, it is important for credit card holders to choose one that suits their needs and lifestyle. InfoChoice make the comparison easier, giving potential holders the right tools to research which credit cards are available, enabling you to make an informed comparison and ultimately the right choice based on your spending habits and financial circumstances. Start comparing now and arm yourself with as much information as possible to make your credit card decision as easy as possible.
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What is a credit card?
A credit card is a plastic card issued to clients by banks and financial institutions. It is used to make purchases when you don’t have cash on you or money in a transaction account. Your credit card will have a pre-approved amount of funds available to you for use for all sorts of purchases and payments such as groceries, bills and online purchases.
Each credit card has a security chip, card number, magnetic stripe, ultraviolet features, and a three-digit CVV/CVC code:
- Security chip. New credit cards come with an in-built security chip. These chips make it harder for criminals to access your details.
- Account holder name. Your name is embossed on the front of your card and is used to verify who you are.
- Card number. Your card number is also embossed on the front of the card. Each card has its own set of unique numbers that are used to process all credit card transactions.
- Magnetic stripe (Magstripe). This is used when swiping your card to make purchases. It contains encoded information detailing the cardholder’s account including their credit card number, full name, the card’s expiration date and the country code.
- Ultraviolet feature. This is an anti-fraud feature that helps people identify the card as genuine.
- 3-Digit CVV/CVC Code. The three-digit code is your card’s security code or Card Verification Value. It is used when making payment over the phone or via internet. It is located on the back of your credit card. It is used for VISA® and MasterCard® branded credit and debit cards. An American Express® branded credit or debit card has a 4 digit numeric code.
How to apply for a credit card
Here are eight important steps in the process of finding and applying for a credit card that suits your lifestyle:
1. Assess your financial situation
Before applying for a credit card, it is important to consider your budget: affordability is crucial and must not only take into account monthly repayments, but also the ongoing fees and charges associated with having a credit card.
Keep in mind that having a credit card may affect your credit rating, if you can’t pay your balance in full and on time.
If you decide to go ahead and apply for a credit card, you need to start comparing which credit card best suits your needs and affordability criteria.
2. Compare cards and find one suited to you
There are many different types of credit cards for different types of needs.
A credit card with low annual fees and a low interest rate might suit you, if you are happy with a no frills credit card with no rewards that is purely for spending.
Bear in mind that a card with rewards is usually associated with higher fees and a minimum spend limit. In other words, a rewards card may require you to spend more before you can reap the benefits of those rewards.
Card with a higher credit limit and stronger rewards programs, are also available but usually have much higher annual fees.
Once you have assessed your income and budget, you will understand what your monthly limitations are. This should help you decide what type of card best suits you.
InfoChoice can help you compare different credit card products from different lenders to find the best card for you:
3. Apply for a card
Once you have selected a credit card that suits you, it’s time to apply. Most banks allow you to do this either online, over the phone or in person at a branch.
4. Prove your eligibility
When you start the application process you will be need to tick all the boxes on the banks eligibility criteria.
Criteria will include:
- Proof of age: you usually have to be over 18 years of age.
- Proof of residency: you may be required to be an Australian citizen or permanent resident.
- A good credit score: If you have been good with credit repayments in the past such as loans and other debts, this shouldn’t be a problem.
- Proof of Income: some cards may require you to earn a certain amount of money before tax per year. The amount you earn will also determine the amount of credit that will be approved to you. The more you earn, the more credit you will be approved for.
5. Provide personal information
During this step you must provide proof of identification to verify who you are. This usually includes information such as your name, address, date of birth or driver’s licence number.
6. Provide financial information
The next step is a crucial one in getting your application approved. You will need to provide information about your financial position. This is to demonstrate that you have sufficient income to pay back the credit lent to you. This information may include:
- Proof of your current income, such as bank statements or payslips
- Employment details, including length of employment and contact numbers
- A list of your financial assets, such as your home, car, investments and other possessions
- Your expenses and liabilities, including any outstanding debts and loans
- Other details such as tax file number and credit score.
7. Complete an ID check
At this point, the bank will verify the documents supplied by you as proof of your identity. Most banks use the 100 point system where different types of documents are worth different points. Primary documents such as a birth certificate or passport could be worth up to 70 points.
Secondary documents such as a driver’s licence or student card, could be worth 40 points.
You are usually required to provide at least one form of primary documentation, but can use a combination of both primary and secondary to amount to 100 points.
Each provider allocates a different amount of points to different types of identification.
8. Wait to hear if you’ve been approved
Some banks are able to let you know if you have been approved within a couple of minutes.
If you haven’t been approved, it may be a case of giving more information or increasing your income.
When do I get my credit card?
Once you have been approved, your credit card will be sent out to you via mail and you should receive it within 5-7 business days.
Once you have received your card, you will need to follow the activation instructions. It is usually a case of accessing your internet banking online or via the banking app and following the instructions.
You will be asked to set a PIN (Personal Identification Number) and sign the back of your card. Once that is done and you have activated the card, you are ready to make purchases.
How does a credit card work?
A credit card is essentially a line of credit where you use the bank’s money to make purchases and repay that money at the end of your billing cycle. A statement is sent out each month so you now how much you need to repay. If you don’t repay the full amount by your statement due date, you will need to pay interest on the unpaid balance.
When you first applied, the bank would have estimated how much you should be able to pay back and therefore assigned a credit limit for you. This is the maximum amount of money you are able to spend. If you repay what you have spent each month, you can then access that entire amount again the next time you need to make a purchase.
How credit card interest works
If you don’t repay your balance in full each month, you will be charged interest on the amount you didn’t pay off. The interest rate is usually between 9.99% and 21% p.a. (per annum) depending on the card and lender. Any transaction considered to be a cash advance (for example ATM withdrawal) will accrue interest at the cash advance rate of up to around 22% p.a.
Your statement will arrive each month and outline all your monthly charges. It will also have a minimum amount required for payment which is typically 2-3% of your balance. If you pay your entire balance in full, you can usually take advantage of up to 55 interest-free days on your purchases in the next statement period. If you forget to make your minimum monthly repayment, you may be charged with a late fee.
Basic information about credit card
Credit cards vs. debit cards
The basic difference between the two types of cards is that with a credit card, you are purchasing things with money that belongs to the bank: you then need to repay it. When you purchase goods and services using a debit card, you are using your own money therefore you don’t need to repay it.
Visa vs Mastercard
There is no difference between the two. In simple terms they are digital payment platforms that provide the system that allows a transaction to take occur. Both are accepted worldwide. Interestingly, banks issue credit cards, not Visa or Mastercard. They have nothing to do with how much interest is charged or what types of points program or fees you will need to pay.
Credit cards offer great security with their zero liability policies. Therefore, you will not be held accountable if a fraudulent charge is made on your account.
Using a credit card at the ATM
Even though you are able to withdraw cash from your credit card, you need to be aware of the charges that go along with it. You will be charged a cash advance fee and will not have an interest free period to repay the cash withdrawal: the interest will be higher on your repayments for the cash advance.
There are three types of promotions you can find when searching for a credit card. Interest free, balance transfer and bonus points.
Interest free promotions are great for those who struggle to make full repayments each month. Interest free periods are usually between 6-12 months and mean the repayments you make in that time go 100% into reducing your balance.
Balance transfer promotions let you transfer your existing balance to a new credit card and repay it at a lower rate. This type of promotion is useful for those of you who have a credit balance that you can’t seem to get on top of. Switching to a balance transfer card will give you the opportunity to make payments with very low interest (and sometimes with no interest at all), so you can chip away at the balance you have owing. These cards have a promotional period and as soon as that period is up, your rate will revert to the current interest rate.
Bonus point promotions are of great benefit to cardholders who have frequent flyer accounts or like earning rewards points. With these cards you receive bonus points for each purchase you make with that card.
What features do credit cards come with
Your credit card will come with a range of features, depending on the type of card you apply for. The following is a list of features to be aware of, noting that not all features apply to all credit cards.
Credit limit. Your credit card limit is the maximum amount of money the bank has approved for your use on your card.
Interest-free days. If you pay your balance in full by the statement due date, you will receive up to a number of interest-free days on purchases in the next statement period. Up to 55 days is the typical interest-free period. This doesn’t apply to cash advances such as ATM withdrawals.
Cash advances. You can use your credit card to get cash from an ATM, for gambling purchases and paying bills but these are all considered cash advance transactions. These attract higher than normal interest rates, usually around 22%.
Rewards programs. You can sign up for a rewards program which earns you points for each dollar you spend at certain places. These reward points can be used towards purchases, entertainment and even holidays. However, these cards often come with higher annual fees and purchase rates.
Contactless payments. Contactless payment is great for purchases under $100. You can tap your credit card or mobile-pay compatible device against a contactless reader to make payment. You won’t be required to punch in your pin if the withdrawal amount is under $100.
Insurance covers. Some forms of complimentary insurance are included with most platinum and black-tier cards offer. This can include things such as travel insurance and purchase protection insurance just to name a few.
How to pay off your credit card
1. Pay on time
Check for the due date of your credit card statement and make sure you pay on or before that date or else you may have to pay interest as well as a late payment fee.
Direct debit or automatic payments are a great way to make sure you never forget. If you prefer to do it manually each month, put a reminder in your calendar to help you remember.
2. Pay as much as you can each month
Paying off more than the minimum debt amount each month will help you pay off your debt quicker. It will also mean you pay less in interest and therefore save money.
Paying only the minimum repayment amount will add years to your repayment plan and will end up costing you a lot of money in interest charges.
3. Reduce the number of credit cards you possess
Sometimes it’s hard to get on top of debt when you have multiple credit cards.
Start by paying off one credit card at a time.
If you start with the smallest debt, it will help motivate you to keep going.
If you have one card that has considerably higher interest than all the others, you may want to consider paying that one off first.
Either which way, you must make the minimum repayments on all your cards in the meantime, cancel each credit card as soon as you have paid it off and use only one card for emergencies.
4.Reduce your credit limit
Once you have paid down your debt, you can contact your lender to ask them to reduce your limit. This will stop you from using the paid off amount and going back into unwanted debt.
5. Get a better deal
Sometimes it’s best to consolidate all your credit card debt into one card. Many banks offer a 0% balance transfer and introductory rates so you can transfer all your debt and only pay off the principal for the introductory period of time. Just make sure to pay off your entire amount before that period is up as the interest rate then reverts to the standard rate at that point
Who provides Australia’s credit cards?
There is certainly no shortage of credit card providers in Australia. The following list is a comprehensive guide as to who you can apply to acquire a credit card:
|American Express||ANZ||Australian Military Bank||Auswide Bank|
|Bank Australia||Bank First||Bank of Melbourne||Bank of Us|
|Bendigo Bank||Beyond Bank Australia||BOQ (Bank of Queensland)||Citi|
|Coles||Commonwealth Bank||Community First Credit Union||CUA|
|David Jones||Defence Bank||Diners Club||ECU|
How do credit card purchases work?
When you receive your credit card, it will arrive with a predetermined approved amount.
The first thing you need to do when it arrives is to activate your card so it is ready to use. You can then make purchases in store, online and over the phone.
You can also use your credit card to make cash advances from ATMs, however be aware that these types of transactions attract a higher interest rate than your normal grocery or product purchases.
Each month, you are required to make a minimum monthly repayment. These repayments are calculated based on the balance owed and the interest rate.
Failure to make a monthly payment could result in a late payment fee.
The advantages and disadvantages of credit cards
1. Convenience Credit cards make life easier for all types of shopping scenarios, whether it be in-store or online and can be used whilst travelling overseas. Protection is a fundamental attribute. Credit cards come with fraud protection and multiple layers of security, so even if your credit details are stolen, your money remains safe.
2. Flexibility A credit card gives you immediate access to money for purchases when you may not have enough in savings. You can then pay it back with smaller pre-determined monthly instalments or in one go if you prefer.
3. Rewards Lenders offer credit card rewards where you earn points in accordance with how much you spend on your credit card. The more you spend, the more points you can accumulate. These points can be used towards many different things such as purchases, experiences and even travel. Just make sure the rewards you earn are worth it. There’s no point in having rewards points, if the cost of any interest and annual fees surpass the amount you are gaining in points.
1. Debt It’s very easy to fall into the credit card trap and find you owe a lot of money, without the means to repay it. Apart from the purchase price, you also need to repay any interest that applies, making your repayments higher than what your initial purchase cost was.
2. Cost of borrowing Credit cards are expensive in comparison to some other loan products. The average interest rate for an Australian credit card is about 17% whilst personal loans are closer to 13%.
3. Surcharges Some businesses charge a 1% to 2% surcharge on credit card payments to cover the cost of processing.
Different types of credit card Interest
There are a few different types of interest rates and it’s important to understand which interest you will pay when making purchases with your credit card.
1. Purchase rate When making purchases using your credit card, you will be charged the purchase rate. This rate applies to any purchase balance that is unpaid at the end of the billing cycle. It does not apply to other interest charges incurred.
2. Cash advance rate This interest rate is charged when you withdraw cash from your credit card, purchase foreign currency or perform international money transfers. A cash advance isn’t just withdrawing money from an ATM. It is also when you transfer money from your credit card account to a transaction account via online banking. It also includes any cash equivalent transactions such as money orders. The interest rate for cash advances is usually higher than your typical interest rate.
3. Promotional or introductory rate An introductory interest rate is usually a lower rate and is applied to balance transfers and purchases made on your new credit card for a limited amount of time. Once this promotional period expires, the interest rate usually reverts back to a higher rate.
4. Balance transfer rate: This is the interest rate usually offered when you transfer your balance to a new card for the purposes of consolidating debt. The rate is usually considerably lower than the one you are leaving.
Choosing the right credit card for you
Before starting your credit card research and comparison, you should determine what your financial situation is and what future goals you may have:
- Current financial circumstances: This is the most important aspect in determining if you should even get a credit card. If you were to make a large purchase on a card, how much could you afford to repay per month? Knowing the answer to this question, will help you decide what type of limit you should apply for.
- What features do you need? There are many types of features available with different products. Features can include annual fee, low interest rates, interest-free period, availability of rewards or frequent flyer points, balance transfer offer and eligibility criteria.
You may find that a credit card with less features, will give you a better interest rate. Always weigh up what features you most need and then determine if it is worth paying the extra money for those features.
What is a credit card tier system?
There are stricter conditions if you are applying for premium gold/platinum and black cards.
You will need a high level of annual income as well as an impeccable credit history to be approved for premium type cards. Applying for a premium credit card will open the doors to exclusive benefits including more reward points and complimentary extras. Premium cards are designed for people who spend a lot of money on plastic and have higher credit limits.
Beware, these types of cards often come with annual fees and higher interest rates than standard or regular cards.
Gold, black and platinum credit cards offer more perks and features than regular cards. These usually include higher credit limits, free insurance policies, rewards programs with better rates, better promotions, purchase protection and extended warranty policies.
Black credit cards are the most exclusive of these types of cards: with a black credit card you will receive superior perks and rewards.
Black credit cards offer a level of exclusivity that other cards do not possess. In order to be considered for a Black card you need to spend considerable amounts of money (in the tens of thousands of dollars) on the card throughout the year.
As stated, these perks do come at a cost so make sure to look at all annual fees and charges before deciding which premium credit card is right for you.
InfoChoice helps you compare over 60 platinum, black and gold credit cards.
Standard or regular credit cards are subject to credit checks, but are usually available to most people who require one.
These types of cards offer standard features and allow you to be approved for a predetermined amount of money.
Banks usually charge an annual fee for these cards.
These types of cards typically consist of low rate cards and balance transfer cards.
Low rate credit cards
Low rate credit cards are credit cards that offer interest rates that are lower than the average credit card.
These are the no frills option as they don’t offer benefits such as rewards programs or high credit limits, therefore are able to keep their rates low.
With these cards you save on interest costs.
Low rate credit cards are suitable for those who don’t or can’t pay off their credit card balance in full every month. These cards are also of benefit if you’re a student or new to paying with credit and want a cheaper credit card option.
Rates are quite competitive and usually range between 8.99% p.a and 14.99% p.a. You can also find many credit cards that offer 0% interest on purchases for an introductory period.
If you are in a bind and need to pay off credit card debt, you can move to a 0% balance transfer credit card which will offer you a no interest repayment period for a specified amount of time.
How to compare low interest rate credit cards
InfoChoice helps you compare over 151 low rate credit cards:
Here are some credit card features that can help you decide which one is best for you:
1. Promotional interest rates Some Australian credit cards have a promotional period where they offer 0% interest rates on purchases for that specified period of time. This period depends on the card and varies between 6 and 15 months.
Always find out the interest rate your card will revert to when your interest free period is up. As any remaining debt will be subject to standard interest rate.
2. Standard interest rate Standard rates on a low rate credit card usually start at 8.99% p.a and go up to around 14.99% p.a.
3. Balance transfer rates Some low rate credit cards offer a 0% transfer balance for a period of anywhere from 6-26 months. With this type of card, you transfer your credit card debt over from your existing credit card and can concentrate on paying down your debt without having to worry about paying interest. However, make sure to pay it off before the promotional period is up. The 0% interest only applies to the amount you transferred, not to any new purchases you make on the new card.
4. Cash advance rates Cash advances usually attract higher interest rates than is applied to purchases. The rate can be as high as 23% p.a and it applies to transactions such as ATM cash withdrawals, foreign currency purchases and gambling.
5. Interest-free days Most credit cards also come with 44 or 55 days of interest-free days however you must pay your balance in full in the previous statement period.
How does a low rate card work?
It’s easy to reduce the interest you are charged each month by choosing a credit card with a low interest rate.
A low rate credit card works in a similar manner to a small personal loan. You are charged interest on the amount you have used for your purchase. However, unlike a personal loan, you can avoid paying any interest at all if you manage your finances properly and are able to pay off the outstanding debt in full each month. However, if you fail to pay the full amount at the end of the month, you will be charged interest on your remaining debt.
Advantages and disadvantages of low rate cards
- Lower your interest repayments A low interest rate means lower monthly interest payments.
- Reduce your credit card debt Transferring credit card debt to a low rate credit card can be help you manage your debt, especially if you opted for a 0% balance transfer.
- Fewer rewards Low rate credit cards are considered the no frills card so there aren’t many rewards of perks with these cards.
- Higher fees These cards may be cheap in interest but the banks make up the money elsewhere, such as balance transfer fees or high annual fees
Balance transfer cards
Taking out a balance transfer credit card is a great way to help you get on top of your unpaid debt. By transferring your existing balance to a new credit card with a low or 0% introductory interest rate, it means your balance will be paid off faster. Balance transfer cards come with promotional periods that can last anywhere from 6-26 months. Just be careful to pay it off before the promotional period runs out as the interest rate will revert to the standard daily rate at that point.
InfoChoice compares over 68 balance transfer products:
How can I compare credit card balance transfer offers?
There are a vast array of products out there. Here are some features to compare:
- Length of introductory offer. Many 0% balance transfer cards offer 6-26 month promotional periods. Low rate options don’t tend to go as long as 26 months. Make sure to select a card that will offer enough time to pay off your balance before having to revert to the standard interest rate.
- Balance transfer fee. Not all banks charge a balance transfer fee, but those that do typically ranges from 1% to 3% of the total balance transfer amount. This fee is charged when your debt is transferred to the new card.
- Balance transfer revert rate. Once your promotional period ends your interest rate will revert to the current interest rate. This is usually the standard cash advance or purchase rate.
- Eligible debts you can transfer. You can usually transfer debt for a number of different credit cards and even from some personal loans.
- Annual fee. There will usually be an annual fee on a balance transfer card. Some cards will have a $0 annual fee or may even waive this cost for the first year. However, when this fee is charged, it is treated as a purchase and attracts the same interest rate as other purchases made with the card. Paying the annual fee immediately, will mean you avoid interest charges.
Avoiding mistakes with balance transfers cards
Make the most of a 0% balance transfer credit card offer and avoid the following mistakes:
1. Thinking 0% interest means no payments are required Minimum monthly repayments are still necessary for each statement period. This is usually stated as “3% of outstanding balance or $30, whichever is greater”, although the percentage and dollar amounts can vary between cards.
2. Only making the minimum repayment each month Provided you make the minimum monthly repayments, you won’t be slapped with a late fee each month. However, paying only the minimum won’t mean you will pay off the entire debt before the promotional period is up. The best way to figure out what your minimum repayments should be (as opposed to the minimum bank requirements), simply take the figure of what you owe and divide it by the number of months you have left on your 0% period.
3. Making new purchases The 0% interest only applies to the amount you transferred. Any purchases you make on the new card will attract interest immediately.
4. Keeping your old card open Always close your old account as soon as the transfer has been made. It’s very easy to fall into the trap of using that card again and accumulating more debt.
No annual fee card
A no annual fee credit card is exactly what the name suggests. It’s a card that doesn’t charge an annual fee on an ongoing basis. In some cases it even waives the first year annual fee. The annual fee is usually the biggest of your fees and is one of the most common fees, so finding a credit card that doesn’t charge this fee could be worth your while.
InfoChoice can help you do this by over 24 no annual fee cards:
The annual fee usually covers you for yearly account maintenance. So, having a card with no annual fee could save you anywhere from $30 to $700, sometimes even more per year in comparison to credit cards that do charge the fee. Of course, signing up for this type of card comes with some disadvantages. If your credit card has no annual fee for the full term of your contract, you may be charged higher interest rates and have fewer perks than some other options.
There are a number of types of no annual fee credit cards.
Some no annual fee credit cards offer just the basics, while others offer a range of additional benefits.
$0 annual fee and 0% balance transfer credit cards are a great option for those who have accumulated credit card debt over time and are unable to get on top of their repayments. Saving money by not paying an annual fee or any interest on the balance for a specified period of time means you can pay down the debt quicker.
No annual fee frequent flyer credit cards are handy if you like to get frequent flyer points for your purchases. You need to shop around to find these types of cards, but if you are a frequent flyer point user, it may be worth your while to get one of these cards.
Reward credit cards with no annual fee are also hard to come by, but if you rely heavily on the rewards point system, why not get the extra benefit of not having to pay an annual fee?
Travel credit cards with no annual fees and no foreign transaction fees are great if you travel a lot or make online purchase overseas. Foreign currency transactions are usually accompanied by fees of around 2%-3%. Using a travel credit card with no annual fees and no foreign transaction fees could save you money as the foreign transaction fee isn’t charged.
Things to consider before applying for a no annual fee credit card
Before you decide if a no annual fee credit card is right for you, you may need to consider a few things.
1. How often do you use your credit card? If you hardly use a credit card and only want it for emergency situations, not paying an annual fee is worth your while.
2. Do you pay off your balance each month? If you sign up for a no annual fee card, you may be paying higher interest than other types of cards. So, if you are the type of person who is able to pay off the balance each month, this card will suit you. If you struggle to pay it each month, then the interest repayments will add to your bill making this type of card an unsuitable choice.
3. What credit card perks do you want? No annual fee cards offer less benefits and perks than cards that charge a fee. You usually won’t get reward points or complimentary insurance with these cards. So, weigh up what you need before you apply.
4.Will you use the credit card after the $0 annual fee promotion ends? Many promotional credit cards have a limited time for you to be able to take advantage of the product. So if your no annual fees promotion is only valid for a year or two, you should look into how much the fees will be once this time is up.
Advantages and disadvantages of $0 annual fee credit cards
- Save money on credit card fees. If you aren’t paying the fee, that’s money in your pocket.
- Cost-effective if you don’t use credit cards a lot. If you only use these cards in emergencies, you are saving money by not paying an annual fee.
- Promotional offers and deals. Some no annual fee credit cards come with promotional offers, frequent flyer programs and other features that you’d regularly have to pay a yearly fee to access.
<br/ > Disadvantages
- Higher interest rates. These cards usually have a higher interest rate. If you are the type of person to not pay off your balance each month, this could really affect your hip pocket.
- Fewer extra features. They usually have fewer features than cards with a higher annual fee.
- $0 annual fee is temporary. Most of these cards have a temporary $0 annual fee so you will need to pay an annual fee once the promotional period ends. Make sure you know when the standard annual fee will apply and how much it will cost you.
Frequent Flyer Credit Cards
Frequent flyer credit cards give card holders a way to earn points on their everyday spending – provided it is eligible. They also offer introductory bonus point offers. These cards are usually linked to an airline loyalty program. You can also get thousands of frequent flyer points in introductory offers. You will be able to earn points on most purchases, however you will not earn points for cash advances, balance transfers and BPAY payments. Once the points are redeemed, you can use them towards flights, flight upgrades and even accommodation.
Are there any traps with a frequent flyer credit card?
Frequent flyer credit cards come with many perks but you must always keep your eyes open for the hidden traps.
1. High annual fees. Most frequent flyer credit cards come with an annual fee in the range of $50 and $450. If you aren’t earning a decent amount of points throughout the year, it may not be worth your while to have one of these cards. There are some $0 annual fee frequent flyer cards available, but these don’t usually have the best rates or features attached to them.
2. Promotional offers and spend requirements. To take advantage of bonus points offers you usually need to spend a certain amount of money in a set period of time. Always make sure that this fits in with your budget.
3. Higher interest rates. Frequent flyer credit cards usually have high interest rates. So they are suited best to people who are able to off their credit card balance in full each month.
How many points can I earn for my spending?
There are two main factors to consider when it comes to earning points with a frequent flyer credit card:
- Earn rate. Always find out how many points you earn for each dollar spent. 1 point per $1 is considered competitive, but some can be as low as 0.5 whilst others are higher.
- Points tiers and caps. These cards have a tier system and depending on the card, the number of points may vary depending on the purchase. Some cards also cap the number of points you can earn once you reach a certain amount each statement period.
What types of features can Frequent Flyer cards offer?
Most of the features you can redeem range from complimentary flight vouchers or travel credits to airline lounge passes, complimentary travel insurance and concierge services.
How can I get approved for a Frequent Flyer Credit Card?
You need to determine whether or not you meet the eligibility requirements to receive approval for a frequent flyer credit card. As with most credit cards, they will request things like proof of income, Australian residency status and credit history details. As these cards are considered premium products, you may need a higher income in order to be approved. Once you have all your documents in order, the bank will assess your details and documents to determine if you’ll be approved or not.
Business Credit Cards
Business credit cards are designed for work-related spending and cash flow and are useful in keeping your business and personal spending separate. Business cards come with the additional benefit of being able to issue a card to employees. They provide you with itemised statements and are compatible with services such as MYOB, Xero and Microsoft Excel.
Business credit cards work in a similar way to personal credit cards. You have access to a predetermined limit and you pay towards your balance plus interest each month. Business cards usually charge an annual fee, sometimes this is for the entire account and other times it is per card. They also offer features such as rewards, complimentary insurance and airport lounge passes.
With expense tracking features, additional cards, interest free periods and reward options, business credit cards can be a convenient option for your business no matter how small or large it is.
What to look for when comparing Business Credit cards
Compare business cards to see which one offers the features you need for your business. InfoChoice helps you compare over 20 Business Credit Card products:
Some of the things you should look at when considering a Business Credit Card are:
1. Business spending habits Determine what your business spending habits are so you can make an informed decision on which product is right for you. To determine what your habits are, look at your eligible purchases, capital expenses, additional cardholder spending and business travel needs.
2. Fees Business credit cards have a wide range of fees and charges, such as establishment fees, annual fees, supplementary cardholder fees, standard interest rates, over limit fees however along with these fees come a variety of benefits such as business rewards, complimentary insurance, expense management systems just to name a few.
3. Advantages and disadvantages of Business Credit Cards
- Tax deductions
- Security features
- Customisable credit limits
- Additional cardholders
- Cash flow management
- Liability options
- Complimentary extras specifically for businesses
<br/ > Disadvantages
- Expensive fees
- Interest charged if you don’t pay your balance in full every month
- Account can only be used for business spending
How to apply for a business Credit Card
Once you have done your research and found the product that is right for your business, you can apply online. You will need to meet the following eligibility requirements and have all relevant documentation at the ready:
- You must be 18 years or over
- You’ll need to be a citizen or permanent resident of Australia.
- You must have a valid ABN (Australian Business Number) to apply and be registered for GST if necessary
- You must have good credit history
<br/ > Documentation
- Contact details for you and/or your business
- A valid form of identification, such as your driver’s licence or passport
- All financial documentation will be required as well as tax returns from the past 2 years Information regarding your income and/or revenue. Also a list of any assets and liabilities, debts and expenses
- Details for additional card holders
Once you have sent everything in, approval usually comes with in a matter of minutes. If you’re approved, you could have your card in as few as 5–10 business days. You can then activate the card and start using it for your business.
Rewards credit cards
Rewards credit cards are linked to a loyalty program where earn points for every dollar you spend on eligible purchases. These points can be used for rewards such as flights, merchandise, accommodation, travel packages, gift cards, cash back and products from the rewards store.
InfoChoice compares over 68 cash back and rewards cards:
Reward credit cards usually charge higher interest and annual fees so make sure the benefits of the points outweigh the amount you are paying in interest and fees.
Eligible purchases are generally your everyday purchases like grocery shopping and online shopping. Transactions that don’t usually get credited with reward points are BPAY transactions, cash advances and account fees.
What types of rewards can I get?
Each rewards card offers different types of rewards, however generally you can find the following: flights and flight upgrades, frequent flyer points, accommodation, gift cards, fuel vouchers, electronics and even tickets to theme parks and movies.
How do I redeem my points?
Each credit card has a different process, but in general terms it’s as easy as following these few steps:
- Log in to your account and find the rewards tab;
- Check how many points you have. If you have enough points to make your selection, then go ahead. If not, you can either wait until you have earned more points or you can pay the dollar difference from your account to make up for the extra points;
- Once you are ready to proceed, click ‘Redeem points’ and follow the prompts to complete your transaction.
How to compare rewards credit cards in Australia
The best way to figure out which rewards card is for you, is to search online and see the different ways you can earn your points. How can I earn points?
- Bonus point offers. Rewards credit cards offer deals that give you thousands of bonus points. This is a great way to get you started.
- Points per dollar. Find a card that gives you at least $1 per 1 point. The higher the better, any lower than that is not considered very competitive.
- Point expiry. Some cards have an expiration date on points or a cap on how many you can earn per month.
What costs are involved in having a Rewards Card?
- Annual fees. Most rewards credit cards charge an annual fee. The rewards you redeem with your points should exceed the annual fee if you are to benefit from this card.
- Foreign transaction fees. Foreign transaction fees of around 2%-3% are common on most credit cards and apply to purchases made overseas or with an international retailer online.
- Purchase interest rates. Rewards credit cards often have high standard interest rates on purchases. If you are able to pay off your balance in full every month then this shouldn’t be a problem for you, but if you are unable to make those payments, then you may be better off ditching the points and finding a card with lower interest rates.
- Cash advance interest rates. You will not receive any points for cash advances and you will also have to pay interest on that withdrawal.
Complimentary features with Rewards cards
Rewards cards come with a decent number of features that you won’t get with a standard credit card. Some of these features include: complimentary travel insurance, flight and travel credits, hotel stays and discounts, extended warranties and concierge services.
Rewards programs can be a great way to get extra value from your credit card, as long as the rewards are worth more than what you spend on fees and charges.
Glossary of terms
|Annual fee||The fee credit card providers charge credit card holders on an annual basis for the use of the credit card.|
|Balance transfer||When a card holder transfers the outstanding credit card balance to another card, usually with a better rate.|
|Balance-transfer fee||The fee charged to make a balance transfer (flat fee or percentage depending on the institution).|
|Cash advance||Withdrawal from a line of credit.|
|Cash-advance fee||The fee (flat rate or percentage) charged against a cash advance, usually on top of a higher interest rate.|
|Credit limit||The predetermined, maximum limit (maximum amount you can spend) of your card set by your institution.|
|Credit report/history||A history of your loan and bill payments. This information is kept by a credit bureau and used by financial institutions to determine your ability to pay debt.|
|Credit score/rating||Your credit record and history is scored by a number that determines whether you are credit friendly. The takes into account ability to pay bills on time, current level of debt and types of credit and loans. A good credit score is 700 or above.|
|Creditor||The institution to whom you owe money.|
|Default||When you fail to make any payments on your debt within a designated time period. Defaults will damage your credit rating.|
|EFTPOS||Electronic Funds Transfer at Point Of Sale. Merchants use EFTPOS to charge customers.|
|Full balance||What you spend on your card each month.|
|Interchange fee||Fees paid between banks for the acceptance of card-based transactions.|
|Interest rate||Interest rates are applied when a card holder fails to pay an outstanding balance. Credit card interest rates are generally higher than those of other loan types.|
|Interest-free days||Card holders have a number of set days (usually 30 days) before interest rates are applied to their purchases. Not applicable to cash advances.|
|Introductory rate||A low interest rate charged when you first acquire your credit card. The rate reverts to standard high rates after a predetermined period.|
|Minimum payment||The minimum amount of money you can use to pay off your outstanding monthly balance.|
|Over-Limit Fee||The penalty you incur for exceeding your credit limit.|
|Penalty fees||If you violate the terms of your cardholder agreement, you will be charged a penalty fee. The apply if you make a late payment or exceed your credit limit.|
|Rewards program||The benefits offered by a credit card provider, usually based on the proportion of money spent on the card. Rewards include cash back, shopping vouchers, frequent flyer miles etc.|
Credit cards FAQs
What is a credit card?
A credit card is a method of payment, usually in the form of a plastic card made to fit your wallet. The card comes with a preapproved limit and allows you make purchases using the bank/lender’s money. Interest is charged on each purchase you make, however if you are able to pay off your balance in full each month, then you won’t need to pay any interest.
What are the numbers on my Credit card?
Your credit card number is made up of 16 digits. The first one or two digits indicate whether it’s a Visa, Mastercard or American Express. Digits two to six indicate which financial institution issued the card, and the final 9 digits are your account number. The last digit is a “check” number used to verify the validity of your card number. The CVV number is the 3 or 4 digit security number on the back of the card.
What is a credit card validation or security code, and where can I find it?
The credit card validation (CCV) number is a 3-digit number that you will find printed on the signature panel on the back of your card. It’s an extra security measure used when making over the phone and online purchases to ensure you have physical possession of your card.
How do the 55 interest free days work?
You may receive up to 55 days interest free period for purchases as long as you pay your closing balance in full before every statement due date.
What do I need to get a credit card?
In order to be approved for a credit card you need to provide the following: Proof that you are 18 years or older, proof of income, proof of residency status, credit history and information about your assets, expenses and liabilities.
Why do the banks need my documents?
All documents are necessary in order to assess your application and verify your identity and income details.
How will getting a credit card affect my credit score?
Each time you apply for a credit card, it is recorded on your credit file. Your credit score will be affected by a number of factors such as your credit limit and whether you make repayments on time. If you have a bad credit history, it may affect any future credit or loan approvals.
Can I get a credit card with a bad credit history?
Having a bad credit history doesn’t necessarily make you ineligible from getting a new credit card, but it will make it more difficult.
What will my credit limit be?
You credit limit will be determined ultimately by how much you earn and what your expenses are per month. Your bank will be able to tell you how much they will approve you for.
How much will my monthly repayments be?
Minimum repayments are calculated as a percentage of the closing balance. This is usually around 2 or 2.5%, or a set dollar amount, whichever is greater. You will benefit if you are able to pay off your full balance each month as you will then not need to pay any interest.
How will I receive my monthly statement?
You can select to receive your monthly statement via post in paper form or via email in digital form.
How are credit card interest rates calculated?
The interest on your account balance is calculated daily and then charged monthly on the statement due date. This means the interest will compound (accumulate) for every day that you don’t make a payment. Always keep in mind that your interest is charged according to your billing cycle, not from the first day you make a purchase on the credit card.
How long does the application process take?
Most banks give you an immediate response. Have all your personal information ready when you start the application and the process should take around 15 minutes to complete. Once you have applied you will receive a response in approximately 60 seconds, unless the institution you have applied to requires further information.
When will I receive my credit card?
Once you have been approved you will usually receive your credit card within 5-7 business days.
How do I activate my card?
Even though each bank has a slightly different process, it usually involves waiting for your card to arrive in the mail and then following the instructions attached with your card. It is usually as easy as logging in online and clicking the appropriate tabs. Or you could call the bank and do it over the phone.
What is a PIN and how do I change my credit card PIN?
Your personal identification number (PIN) is a 4 digit number that is used as a security measure for over-the-counter purchases, ATM and branch usage. With most banks, you can set your own PIN via their online services. Their specific process should be listed in a letter that arrives with your new card.
What should I do if my credit card is about to expire?
You usually don’t need to do anything if your credit card is about to expire as the bank will send out a new card before the expiration date. However if you are getting close to that date and have not received your new card, it’s wise to call the bank.
How do credit card companies make money?
The two major ways in which credit card companies make money are through fees and interest. The fees include annual fees, late fees, cash advance fees just to name a few. The interest you pay can be avoided if you pay off your balance each month, however these companies bank on the fact that you won’t be able to repay the full amount and you are then charged interest on the balance each month.
How do I choose the right credit card for me?
Always consider your financial situation when applying for a card. Look at your current financial circumstances, financial goals and what feature each card offers. Once you have compared all of these aspects, then you can make an informed decision on which card would suit you best.
How can I avoid credit card fees?
There are a couple of things you can do to make sure you won’t have to pay extra credit card fees, such as make sure you are able to repay your purchase to avoid over-limit or dishonour fees. You can also schedule automatic repayments to avoid any late payment fees.
When is the annual fee on my credit card charged?
Your annual fee is charged upon opening your account. You may then activate your card. After this time, it is charged on each anniversary of the date on which your card was first issued to you.
What is a credit card over-limit fee and when is it charged?
An over limit fee is charged when you exceed the amount that you have been approved for.
What is a balance transfer?
A balance transfer is when you transfer the balance of one account over to another account held at a different financial institution. This usually relates to credit card transfers.
How could I benefit from a balance transfer?
A balance transfer is very useful if you have any sort of debt that is accumulating high interest and you are unable to get on top of payments to reduce the balance. Balance transfers usually offer lower interest rates and some even offer 0% interest for promotional periods.
Do I have to close my other accounts when opening a balance transfer account?
It is usually a requirement from the lender that you close any of the accounts that you have transferred to the new account. This benefits you in a number of ways such as eliminating annual fees on the other accounts, simplify your finances, prevent you from accruing additional debt and reduce the amount of credit recorded against your credit bureau record.
What is a Balance Transfer fee and how is it calculated?
A Balance Transfer fee is usually applied when you open your new account, however not all banks charge this fee. It is calculated as a percentage of the total amount being transferred and is added to the Balance Transfer amount.
If I have a credit card with a promotional $0 annual fee offer or 0% interest, can I cancel the card before having to pay the annual fee?
Yes you can cancel your card at any point provided the balance has been paid off in full.
Is a no annual fee credit card free?
No credit cards are ever free. You could save on these $0 annual fee cards if you pay your balance off each month. Unfortunately, most people don’t manage to do this and end up paying interest on their balance.
What’s the difference between credit cards and debit cards?
With debit cards you use your own money to purchase goods and services, so you don’t owe anything at the end of each month. With credit cards, you are using a preapproved amount that the bank has loaded onto your card. You will need to repay this amount et the end of every month. If you can’t pay it in full, you will need to also pay interest.
Do I still need to sign the back of my card?
These days no one looks at the back of the card to verify if your signature is correct as we now use pin numbers when making purchases. However, there is no harm in adding the extra security of your signature to the back of the card.
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In a world that is increasingly reliant on plastic, credit cards are used for everything from groceries to bills and that little purchase over the internet. Naturally banks and lenders offer hundreds of Australian credit cards and a great deal more features, offers and deals. In the pursuit a perfect credit card it is wise to spare sometime for thorough research, reviewing and comparing. Research is the tool that arms you with the knowledge required to make informed comparisons. These comparisons will hopefully indicate the credit card most suitable to your own spending habits and financial circumstances.
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