If you’re like most people, your money is important to you; you just need a little help to make the right decision. There’s not really a best credit card that will suit everyone, in this video, we look at how to choose your next credit card.
Video transcript
Hi, I’m David, and this is Credit Card Compare. If you’re like most people, then your money is important to you, and you just need a little help to go in the right direction. There are hundreds of credit cards in Australia, and you probably won’t keep the same credit card forever. There’s not really a best credit card that will suit everyone. Instead, here are three general ideas to help you choose your next credit card:
1. Choose the Type of Credit Card That Suits You Best
By that, I mean know what suits your personal finances and the way you spend and repay. Think about why you want the card and what you’ll use it for. You should choose a type of card that will work for you and your financial goals. Here are a few scenarios to help get you thinking:
- Balance transfer credit card: If you’ve got a balance on your credit card that you’re carrying from month to month and you want to move to a card with a much lower interest rate, then a balance transfer credit card could save you a stack of money on interest. You’ll be paying it off over a long period at 0% for 6, 12, or even 24 months. It’s like refinancing, only it’s your credit card. For example, a person with $5,000 of credit card debt can do a balance transfer and save around $1,000 in interest and fees. You can toggle the sliders to calculate how much money you could save.
- Basic credit card: If you don’t have a lot of credit card debt and just want a card to conveniently pay for shopping or cash flow a few expenses from time to time, then a basic credit card with a low ongoing interest rate or no annual fee is probably what you’re after.
- Rewards card: If you’re like the 1 out of 3 people who tend to pay off their balance in full every month, then a frequent flyer credit card or rewards card could be worth checking out. The interest rates and annual fees are typically higher, but the rewards are there for those who know how to play their cards right. Using our comparison tables, you can calculate how many points you could earn.
Whichever scenario you find yourself in, use our free comparison site to help find the card that suits you best.
2. Narrow down your options
There’s a lot to consider at this stage, some being more important than others, but it’s time to be more specific and filter down to the cards that you’re happy with. You’ll want to consider the financial aspects first:
- The interest rates on purchases
- The annual fee
- The number of interest-free days
- The credit limit (so that you can use the card for as much spending capacity as you need)
- The number of additional cardholders
Then think about:
- The bank (are you happy to bank with them?)
- Internet banking, phone banking, and mobile apps
- Are there any branches nearby?
- Do you earn rewards points?
- Free flights and travel?
- Complimentary insurance coverage for shopping or travel?
You can find this sort of information by clicking the “more info” button on any of the comparison tables on Credit Card Compare. And if you find it useful, you can compare cards side by side.
3. Check your eligibility
This is important to check before you go ahead and apply. Banks set different levels of criteria for each of their credit cards, and for good reason. There’s no point applying for a card that you don’t meet the minimum criteria. Banks will be looking at four different things:
- Be at least 18 years old
- Be a citizen or permanent resident of Australia
- Meet the minimum income threshold required
- Your credit rating, which helps them figure out, "If we give this card to you, are they going to pay it back?"
It's pretty simple really
There you go:
- Choose the type of credit card that suits you best
- Narrow down your options
- Check if you’re eligible before applying
Remember, it’s about making it work for you. I hope that this has been helpful. These are my top tips for choosing your next credit card.
