Choosing a credit card is one of those “grown-up moments” of your financial life. You want something that can help you build a healthy credit history while also teaching you valuable money lessons. As Roland Bleyer, the founder of Mate.com.au says: “Some Australians still have no idea how much they can save simply by having a different type of credit card. We’ve put together the technology and research to help them find the best credit card in Australia, not based on what others say, but based on their personal needs and habits”.
With more and more people fearing credit card debt, it’s advisable to be wise when picking your card. In the first quarter of 2019, bank lending via credit cards reduced by up to 4.8 percent. This is the largest decline since June 2002. (The ASIC has interesting data on this)
Aussies are now looking for cards that keep their costs as low as possible. Understanding the different options you have is the ideal way of picking your card, and this post will help you learn the different types of credit cards you can pick. Read on!
Which Credit Card is the Best in Australia?
Now here is no quick answer: The best credit card in Australia depends on the option that best meets your needs. For some, it could be a card that offers reward programs while others will prefer cards with a low-interest rate and no annual feels. Heavy spenders will probably want one with a high credit limit.
So, when looking for the best credit card, be sure to consider your needs, preferences, and goals. Also, figure out how much you’re willing to pay in fees. Credit cards in Australia have fees as low as $25 to as high as $700 or more.
Also, consider a card that offers flexibility in paying off your balance over time. These are basically cards with low-interest rates. Now you’ll see why you just don’t want to choose any card that your friends say is the “best Australian credit card” – because they’re all unique:
1. Low-Interest Cards
If you want to reduce your interest repayments, low-interest cards are the ideal option. You don’t want to go for those options that charge an interest rate of 20 percent or more. With a little bit of research, it’s pretty possible to get cards with an interest rate of 9 to 14 percent.
These cards are ideal for people who have debts. The average credit card balance has been over $3, 000 since 2008. With low-interest credit cards, you can work on paying off your balance easily. Some of these cards have complementary insurance and while offers offer interest-free days on purchases when you pay your balance on time.
2. No Annual Fee Cards
If you use your credit card several times a year and you can keep up with your monthly repayments, no annual fee cards are ideal for you. They’re also recommended for those people who just want a card for emergencies.
Basically, with these cards, you don’t pay any annual fee, which means you’re likely to save money. Also, some cards allow you to earn rewards while using them. However, they’re likely to have high-interest rates compared to a low-interest card.
3. Low Income Cards
As the name suggests, low-income cards are ideal for people in the low-income bracket. Retirees and students can also apply for them. They are a good option because charges and fees are usually low.
Applicants for these cards must have an annual income in the range of $15, 000 and $30, 000. These cards also have a lower credit limit of about $500 or more, meaning they can help you avoid over-spending. They have an interest rate of between 11% and 19.99%, and many of them offer up to 55 interest-free days.
They don’t have many features as top tier cards, and they also need applicants to have a great credit history.
4. Student Credit Cards
If you’re in full-time education, these cards are suitable for you. They have no to little annual means, meaning you only have to commit to interest payments. The interest rates are also pretty low, so having one is just cost-friendly for students.
However, they have a low credit limit. But this is a good thing as a student as you can learn low to plan your finances. They offer a great start-off point for you to try out credit cards. Some cards allow you to link them to your online banking app to help you manage your money.
You don’t have to worry about lack of credit history when applying for student credit cards. They’re designed to give you a starting point.
5. Rewards Credit Cards
If you’re like most people who want to get something back for using credit cards, then rewards credit cards are worth considering. Basically, these cards allow you to earn redeemable points for every dollar you spend.
The rewards can also be in the form of retail discounts with specific retailers, frequent flyer points, and cashback. However, these cards are designed for people who spend generously when using their cards. Typically, the more you spend, the more rewards you earn.
Annual fees and interest rates also seem to be pretty high. Research has shown that cards that offer you frequent flyer points are the best options than cashback or gift card programs.
6. Prestige Credit Cards
Prestige credit cards are designed for those who have no problem paying more for their cards. They come with luxury perks, such as hotel upgrades, limousine transfer services, dedicated 24/7 support, and airport lounge passes. Basically, these perks complement the lifestyle of big spenders.
With these cards, you get premium perks, larger credit limits, and extra features. In Australia, black and platinum cards are considered prestige cards, and most have a minimum income requirement of $75, 000. You also need to have a great credit history.
Annual fees and interest rates are significantly higher than other cards, and some cards offer invitation-only application.
7. Business Credit Cards
Whether you own a small start-up or a large corporation, you can leverage the perks of business credit cards. They allow you to separate your business spending from personal expenses. You can also assign cards to employees and manage your cash more conveniently.
With these cards, there’s the aspect of liability. Ideally, you as the business owner or your business entity can be responsible for managing the account. The managing party will be held responsible for any issues with the account.
You can also get features such as business tools, rewards, complementary insurance, online banking, and travel extras. Some cards also offer expense management systems to help you stay on top of your business expenses.
With more people turning away from carrying cash, credit cards are becoming a convenient way of transacting. Whether you’re shopping online or booking a holiday, cards have made it seamless to pay for just about anything.
However, there are plenty of options out there when looking for the right credit card. Depending on your spending power, you want to look at the features such as rewards, interest rates, annual fees, and credit limits. Also, review the eligibility requirements of any card before applying. (Suggested reading: “How Australians now use credit card aggregators to save“)