Want low rates, rewards, a lot of free add-ons, and no annual fee? Compare your credit card options to assist you in finding the one that’s right for you.
With so many issuers all looking for new clients, the Australian market for credit cards is very competitive. Because of this, you now have more variety to choose from, with better features all round. On the other hand, it takes a lot of time to browse all of the card options to figure out which one best suits your needs.
Comparing credit cards takes the speculation out of the equation because it lets you see all of the choices available to you side-by-side, so that you can make an informed decision. You can take a look at our comparison of credit cards from all of the major Australian providers here, sorted according to the features you’re likely to want. We also show you the different credit card types available and give you reminders about the key issues consider when matching the selections to enable you to get the best one for you.
Techniques for comparing the best credit cards in Australia:
It’s important to take a number of factors into consideration to get what’s best for you, irrespective of the kind of credit card you’re searching for. We’ve summarised here the important qualities you should look for when comparing credit cards.
Interest rate on purchases
This is also known as the purchase rate, and it’s interest charged on the majority of transactions made with your card. Typical purchase rates vary between about 10% p.a. and 22% p.a. (variable) based on which card you select. Cards with zero percent interest rates are sometimes available as introductory offers, but they revert to the regular rate after the promotional period has expired.
It’s vital that you give some thought to the interest rate on purchases (both the introductory and the ongoing) when doing your comparisons, to give you an idea of the likely cost of holding a balance. This interest rate may not be of concern if you usually pay off your full balance, but if you tend to carry a balance, then select a low-interest credit card
to help keep your costs down.
Rate on cash advances
Exchanging foreign currency, withdrawals in the ATM, placing bets and other charges for all attract the cash advance interest rate. This is typically between 19% and 22% p.a. (variable) and you’re charged as soon as the transaction is made.
Cash advances do not qualify for any interest-free periods and they can also attract more fees. It’s essential that you take this factor into consideration when doing your comparisons to give you an idea of the potential fees for these transaction types, but it’s best to avoid credit card cash advances as much as possible.
Fees on cash advances
Credit card issuers charge a one-time fee for cash advances, in addition to the cash advance interest rate. You should check this before getting a card and using it to do a cash advance, but the usual figure is somewhere between 2% and 3.5% of the total cost of the transaction cost. It’s also smart to check this fee as you compare cards so you’ll know how much it costs to do a cash advance for the option you ultimately choose.
Rate on balance transfers
This is the rate for any debt you have transferred from older accounts to the new card. This rate is usually low, and is often zero percent for a fixed promotional period. The card will revert to a standard, higher rate at the end of this period. It’s essential to look at both the standard and the introductory rate e when comparing balance transfer cards to enable you to budget properly.
Fee on balance transfers
Some credit card issuers charge a one-time fee for processing balance transfers
. The charge is typically around 1% to 3% of the full figure you’d like to have moved to the new card. It’s important to keep this in mind as you compare balance transfer proposals since not all card issuers have this charge, and you want to ensure you get an alternative that you can easily afford.
Reduced or no annual fees
for the first year, zero percent interest rates, and bonus points for signup are a few of the promotional features credit card issuers offer to new customers. Although these offers are usually temporary, they can be an excellent way to get value from a new credit card.
Ensure that you consider the ongoing features on the cards with introductory offers to get a real sense of the value you will get in the long run. You should also look at the duration of the introductory period and at the terms and conditions of the offer. As an example, you might be required to spend a certain amount of money in order to receive bonus points on a reward card, or an offer for a balance transfer might only apply if your transfer request is included in your card application.
Annual fees on credit cards start at around $25, but can be as high as $700 and more. Cardholders usually pay when the account is first activated, and then annually on the anniversary of the activation.
As you compare cards, take into consideration whether the features will offset the annual fee. This will ensure that you’re getting the best value. Also check the ongoing features of cards that offer low or $0 annual fees for the first year to avoid any unpleasant surprises when the first year is up.
Interest free days
You can get a specified number of days interest-free on your statement cycle when you pay off your balance every month. Most issuers offer between 25 and 62 interest-free days.
The amount of available interest-free days can be a significant factor in your comparison of credit cards if you plan to clear the balance every statement cycle. Keep in mind that this will be a useless feature if you plan to carry a balance.
Credit card issuers offer a broad variety of free add-ons. Purchase protection and travel insurance, best price guarantees, extended warranty coverage, dining programs, ticket and event offers, concierge services, airfares and airport lounge passes are some of the most popular options.
If you actually use these perks, they can give you hundreds of dollars in additional value. Be realistic when looking at the free add-ons as you compare credit cards, as these complimentary extras can offset some of your fees.
, and many other credit cards have rewards programs of their own, while others are connected to programs that already exist, for example Velocity and Qantas Frequent Flyer programs, or the Coles flybuys program. Give thought to the number of points you will need to before you can redeem rewards, and how often you plan to use your credit card in order to decide whether or not a rewards credit card is the right option for you.
Fees for international transactions
Most issuers charge a fee for transactions made with overseas merchants, especially when these are in a foreign currency. This fee is usually between 2% and 3.5%. It makes sense to consider cards with lower fees or that dispense with this cost altogether, especially if you’re going to use your card for online shopping, or you want to use it when travelling.
Late payment fee
Most issuers have a charge if payment is not made on the date due as specified in your statement. This is usually between $5 and $30 and the issuer will add it to your account balance once the payment is late. You may want to factor this into your decision, although it’s always a good idea to pay at least the minimum by the due date.
Most issuers charge between $10 and $30 if you go past your agreed limit. This is another important charge to consider as you compare different cards, because you need to know what prices to look for in different situations. The overlimit fee might also inspire you to ask for a realistic credit limit when you submit your application.
Other charges and fees
Apart from the fees already mentioned, your credit card may have a variety of other fees for features and services, such as:
- Printed statement fees
- Additional cardholder fees
- Emergency card replacement fees
- Enrolment fees for optional rewards programs
Take these charges into consideration and pay attention to when they could apply so you will know the other costs that may be payable for the card you opt for.
Australia abounds in credit card options, and you’re sure to find one that suits your needs, from black and super-premium cards to balance transfer and low rate, no fee options. You’re now ready to begin comparing cards, because you know more about the various factors that should be taken into consideration, and you’re one step closer to finding one that will truly work for you.