If you feel you need or want a credit card, it's handy to know how to actually apply for one. Credit cards can be used for a variety of reasons, including travelling, purchase protection, balance transfers, managing budgets, and discretionary purchases.

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, particularly 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. 

Low-frills, no annual fee, low interest rates

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 little in the way of rewards. They might not get airline points or extra perks but they can be suitable for someone who wants a convenient option for spending domestically and for budget management.

Rewards, platinum or travel cards

This is where credit cards can get tricky. There are many possible features on rewards, platinum or travel cards. Features can include airline lounge access, frequent flyer points, complimentary travel insurance and other perks.

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.

Cards with a higher credit limit and stronger rewards programs usually have much higher annual fees.

Balance transfer or debt consolidation

If you have a debt-laden credit card with an unattractive interest rate and the interest bill is proving expensive, you could consider a balance transfer.

A balance transfer essentially moves your debt to another credit card - the main motivation is a lower interest rate. Further, many products have promotions where they offer 0% interest rates on balance transfers for a set period, and some might waive the balance transfer fee as well. This fee is usually a proportion of your balance.

Balance transfers can be a useful way to get on top of your debt and make repayments while interest is potentially 0%.

Once you have assessed your income and budget, you will understand what your limitations are. This should help you decide what type of card best suits 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 provider's 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 may also determine what your credit limit will be. The more you earn, the higher your credit limit could be. However, you don't have to accept the maximum credit limit offered to you.

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 or 100 points of ID - usually your licence, passport, bills or bank statements.

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;

And 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 can let you know if you have been approved within a couple of minutes. If you haven't been approved, you may just be required to present more information. If you are knocked back, it can be tempting to apply for another product, however be careful because too many applications (and rejections) on your credit history can negatively affect your credit score.