The best no–frills credit cards

Lots of Australians are looking to pare down their financial commitments in the wake of the covid-19 pandemic. If you’re one of the Aussies planning to reduce your spending, then as well as reviewing your utility bills and curbing your cocktail habit, you might also want to look at some no–frills credit cards.

A so–called no–frills card is one that has a relatively low interest rate, often no annual fee and few, if any extra features. These types of cards are popular among people looking to reduce or control their spending on credit cards, as well as for younger borrowers just starting out with their first credit products. The low interest rates make these cards easier to maintain in good order and the lack of perks like reward schemes can help to remove the temptation to spend extra money just to earn more points.

Even though these more basic cards might seem and feel “safer”, borrowers should always look at the features. These cards will usually have late payment and over limit fees that are the same size as most other cards, for example. You might also find that the lack of an annual fee might be “balanced out” by the lack of complimentary travel and purchase insurance.

However, if you’re still more focussed on saving money and reducing your debts, then you’ll want to find out more about no–frills credit cards. Here’s InfoChoice’s five best picks of the moment.

The Heritage Visa Low Rate card

The Heritage Visa Low Rate offers borrowers a 10.80 per cent p.a. purchase rate and cash advance rate. Cash advance rates tend to be higher than the purchase rate, even with low interest rate cards, so this is a good product for anyone who might draw cash out regularly.

There’s no doubt that 10.80 per cent p.a. is an attractive interest rate, but there’s no automatic travel insurance or purchase insurance. You also won’t be able to use the card in overseas ATM machines. The Heritage card has no interest–free period on new purchases, so it’s ideal for someone who doesn’t want to spend a lot or make lots of impulse purchases.

The Unibank Visa card

This card is currently offering new holders a six–month period of 7.9 per cent p.a. before reverting to 11.5 per cent p.a. on both purchases and cash advances.

There’s no annual fee involved with this product and there’s an interest–free period of up to 55 days on purchases. You won’t get any free insurance with this card, but you can use overseas ATM machines. The Unibank Visa is another card which could work well for younger borrowers, especially as it has the same interest rate on cash advances as it does on purchases.

The CUA Low Rate card

This card has more functionality than the Heritage and Unibank cards and it also has a slightly higher interest rate of 11.99 per cent p.a. on purchases. It also has a more “standard” cash advance rate of 21.74 per cent p.a. so it might be suitable for a more seasoned borrower looking to cut credit card costs.

There’s an annual fee of $49, but this is waived for the first year and there’s up to 55 interest–free days on new purchases.

The CUA Low Rate card can also work as a balance transfer card, offering a zero per cent interest rate for 13 months, after which it reverts to the cash advance rate. You can transfer up to 80 per cent of your credit limit.

The G&C Mutual Bank Low Rate card

G&C Mutual Bank Low Rate Visa card has a very low interest rate of 7.49 per cent p.a. on purchases and 15.49 per cent p.a. on cash advances. There’s an interest–free period of up to 50 days on new purchases, as well as overseas ATM access. The fee for using an overseas ATM is $5.

This card has no reward programmes and doesn’t come with automatic travel and purchase insurance. It also has a minimum monthly repayment of either three per cent of the balance or $20, whichever is higher.

The Bankwest Breeze Mastercard

This card has an introductory rate for new Bankwest customers of zero per cent for 15 months, but this offer is time–limited. After the introductory period ends the card reverts to 10.99 per cent p.a. for purchases and it’s 21.99 per cent p.a. for cash advances.

You can also use this product as a balance transfer card, with a BT interest rate of 2.99 per cent p.a. for nine months, after which the card reverts to the purchase rate. You can transfer up to 95 per cent of your credit limit.

There’s an annual fee of $79, but you do have overseas ATM access, there’s no automatic travel or purchase insurance, but you can add up to three other users for no fee.

The CommBank Essentials card

The CommBank Essentials Mastercard offers borrowers 9.90 per cent p.a. on both purchases and cash advances. There’s up to 55 days interest–free on purchases and holders can block, lock or limit the card through the CommBank app.

Cardholders pay an annual fee of $60 and the minimum payment is either two per cent of the balance or $25, whichever is greater. Overseas ATM withdrawals are free, but there’s no automatic travel or purchase insurance included with this card.

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