Taking out the first credit card can be a landmark in anyone’s financial life. It is a convenient way to shop for things with no money.
Available in a wide range, a credit card helps fulfil the diverse needs of people while giving you added perks such as complimentary insurance, frequent flyer points, and more.
No doubt it gives you financial freedom, but it can be expensive if you are not careful in repaying the balances on time.
To help you make the correct selection, we have created a detailed comparison of top credit cards and how you can apply for them in different banks in Australia.
1. What Is A Credit Card?
A credit card is a physical or digital card that a bank or financial institution issues as a line of credit loan.
You can purchase and pay for things in advance with a credit card. A credit card holder can borrow up to a fixed spending limit to buy services and goods in-store, online, or overseas and pay for them later.
2. Pros And Cons Of Using A Credit Card
Before applying for a credit card, you need to know the benefits and disadvantages.
It is a convenient way to "get something for nothing" for some period (usually up to 55 days)
It is easy to pay for food, travel, accommodations, and hospitals.
Making timely repayments on your credit card helps build a good credit score and improve your credit history. It makes it easier to get an approved loan.
Unlike banks and financial institutions that charge high-interest rates on loans, a credit card gives you the benefit of an interest-free loan, provided that you pay off your credit card balance on time.
It gives peace of mind in case of emergencies when you need money.
You earn rewards in the form of frequent flyer points, cashback, gift cards, or upgrades each time you use your credit card.
Failing to pay your credit card dues on time can cost you hundreds (or thousands) as “interest” on your accrued debt.
Credit cards charge around 20% of the average interest rate. It is relatively expensive compared to other loans that charge an average of 14.41% interest for a personal loan.
Some credit card companies also add a “Surcharge” to credit card payments to cover the cost of using a bank’s merchant service, enabling customers to swipe/ tap the card to make a payment.
As these services are an expenditure for businesses, they charge an additional fee, as a Surcharge, to cardholders, around 1% to 2% of the total purchase cost.
3. How Do Credit Cards Work?
A credit card is a line of credit up to an agreed limit. It is also called a credit limit. Let us understand how it works with an example. Let’s say your credit card comes with a credit limit of $10,000. It implies that you can only borrow up to $10,000 per month.
You must pay it back to the lender/credit card issuance company within a specific payment period. If you fail to do so, you get charged interest on the accumulated debt.
4. What Is Credit Card Limit?
If you are planning to apply for a credit card, it is necessary to understand its key terminologies. A credit limit is the maximum permissible debt on your credit card at any instant. It is determined at the time of applying for a new credit card.
As a credit card applicant, you can indicate your preference for the credit limit. The credit provider decides the credit limit considering your existing debt, household expenses, income, employment, credit history, etc.
If you spend beyond your credit limit, your new transactions decline, or you incur a fee. Do you want to increase your existing credit limit? Here are some tips for helping to get approved for a higher credit limit.
Use the card more often than just once a month.
As your credit limit depends on your creditworthiness, you need to show a proven track record of timely repayments of monthly instalments.
Like your credit history, how much you earn is another major factor determining your credit limit. So, if you have received a pay hike, update your financial status and request the bank to increase your existing credit limit or issue a new card with a higher limit. Additionally, you can consolidate your accounts to give a better picture of your finances which may put you in a better position to negotiate the credit limit.
Set a realistic expectation of a credit limit increase as the amount by which the limit can increase is governed by laws and regulations. When asking for too much credit, it can be viewed as a red flag and may result in a request denial.
Work on building your credit score and repayments history.
5. What Are The Different Types Of Credit Card Fees?
To take advantage of the facility to borrow money and pay it later, you need to pay fees as applicable on the credit card you use. Some of these include:
Annual fee: This fee is charged automatically by the credit card provider to keep your card account active. However, not all credit cards charge this fee.
Cash advance fees: This is the fee when you withdraw money from your card.
Over-the-limit fees: Credit card providers charge a penalty fee if you spend above the credit limit.
Balance transfer fees: This is the fee when a credit user moves balances from one card to another.
Currency conversion fees/foreign currency exchange fee: A credit card holder has to pay this charge to convert one currency to another as part of a financial transaction)
Late payment fees: It is the fee when you can’t afford to pay the minimum amount.
Dishonour fees: Credit card providers charge this fee when the payment on the credit card is dishonoured due to a cheque bounce, insufficient funds in the account, etc.
Replacement card fees: Some card providers charge customers for card replacements.
Over-the-counter fees: This is the fee when you withdraw a cash advance from your credit card.
Goods Service Tax: All credit card transactions incur this charge, as per the general rates in the country.
In addition to the above, credit cards have a wide range of interest rates that applies to unpaid balance. You pay interest on the borrowed amount if you fail to pay the monthly closing balance.
6. Steps To Get A Credit Card In Australia
Follow the steps below to get a credit card in Australia:
Step 1: Check The Credit Card Requirements In Australia
The first step to getting a credit card is to find out when can you get a credit card in Australia. You need to meet the following requirements:
You need to be at least 18 years.
Should have a good credit history (It is a good practice to check your credit score before applying for a credit card)
Meet the minimum income requirements specified
Not have been bankrupt (including Part IX agreements)
Not had any defaults on any Loans, Interest-free finance, Credit cards, or Store cards in the last five years.
Be in your present job for over six months.
Have a satisfactory Credit Risk Profile/Credit Score
It is a vital step since applying for a credit card without checking if you meet the credit card requirements could damage your credit score.
Use the Money Saving’s Credit Card Eligibility Calculator to discover which credit card you are eligible for to protect your credit score.
You may become an additional cardholder on your parent or guardian’s credit card at the age of 16 years or more. In that case, you will get a credit card in your name and under the original cardholder account.
However, they will be liable for any transactions made on the account.
Step 2: Get The Documentation Ready
Nearly all credit card providers ask you for certain documents to confirm your identity and establish your creditworthiness:
An Australian driver’s licence number (if you have one)
Present employment and income information, including bank statements or payslips
Details regarding your current debts, like “buy now pay later” services, personal loans, etc
Details of your monthly household expenses that include rent, bills, transport, food, childcare, and education
Details about your assets, including car, savings, or home you own
If you are self-employed, you must present tax returns and financial statements for the last two years, proof of rental income for real estate properties (if any), and three months of recent account statements where your income is going.
Step 3: Understand The Different Types Of Credit Cards
With plenty of credit card options available, you need to know the difference between them to find what works best for you.
Balance Transfer Credit Cards
This type of credit card allows you to transfer your existing credit card debt to a new balance transfer credit card. You incur a low – or 0% introductory interest rate for a specific period. It helps clear your existing debt faster and saves interest costs and fees.
However, after the offer period ends, the interest rate reverts to the higher rate.
Low / No Annual Fee Credit Cards
This type of credit card involves low or no annual fees, either ongoing or only for the first year. If you intend to use this card only a few times a year and plan to pay back the balance every month, then this card is ideal for you.
Where other cards charge 20% p.a. or more on purchases, low-interest rate credit cards generally come with an interest rate as low as >15% p.a. that can save you hundreds of dollars per year.
It makes it a cheaper way to manage balances if you carry them from month to month or forget to repay the balance from time to time or want to be more budget-conscious.
Since these cards charge lower annual fees, they don’t provide benefits like reward programs, incentives, or complimentary insurance that you get with other cards.
Rewards Credit Cards
A rewards credit card earns cash back, rewards points, and shopping vouchers while you shop for your favourite things using the credit card.
You can accumulate these points to redeem them in shopping vouchers, gift cards, frequent flyer points, free flights, cash back, etc. It is the ideal credit card for those likely to shop a lot with their credit card and pay the bill in full each month.
The type and value of rewards points you earn vary based on the card’s earn rate and the rewards program. When choosing the best reward credit card, look for one that gives you introductory or bonus points, as it will help you quickly build your balance.
Frequent Flyer Credit Cards
Are you a travel freak? Then, this is the ideal card for you. Every time you shop on this card for travel purposes, you earn redeemable frequent flyer points that you can redeem the next time you shop for free flights, a new smartphone, seat upgrades, and more.
When buying this type of card, look for bonus points offers and other perks like airport lounge passes and insurance.
Low-Interest Rate Cards
If you are unsure whether you will be able to pay off the bill in full each month, then you should choose a low-interest credit card. This card offers a low-interest rate and allows you to buy things with peace o mind. This way, you can buy what you need while keeping the borrowing costs low.
Some cards even charge no interest for a lifetime or a limited period. If you are planning to get such a card, look for ones that offer interest rates of 14.99% p.a. or less. Also, check the annual card fee as it can be higher for these credit cards.
Step 3: Compare Available Credit Card Options
Compare individual credit card products based on the below factors such as:
The interest rate
The annual or monthly fee
The benefits and rewards on offer
The number of interest-free days on offer
Like any other financial decision, thoroughly research the available products you are considering, read all documentation, weigh up your needs against the pros and cons of credit cards, and choose the one that most closely meets your needs.
Here we have compiled a list of the best credit cards in Australia:
|Credit Card Provider||Purchase Rate P.A.||Interest-Free Period||Balance Transfer Rate P.A.||Yearly Fee|
|Citi Premier Qantas Card||0% for 6 months, reverts to 21.49%||Up to 55 days on purchases||0% for 6 months||$175 for the first year ($350 after)|
|HSBC Platinum Credit Card||19.99%||Up to 55 days on purchases||0% for 36 months||$29 for the first year ($129 after)|
|Citi Clear Card - Balance Transfer Offer||14.99%||Up to 55 days on purchases||0% for 36 months||$49 for the first year ($99 after)|
|Kogan Money Black Card - Exclusive Offer||20.99%||Up to 55 days on purchases||0% for 30 months||$0|
|Citi Rewards Card - Purchase and Balance Transfer Offer||0% for 14 months, reverts to 21.49%||Up to 55 days on purchases||0% for 14 months||$0 for the first year ($149 after)|
|St.George Vertigo Card||13.99%||Up to 55 days on purchases||0% for 32 months||$0 for the first year ($55 after)|
|Citi Rewards Card - Velocity Points Offer||21.49%||Up to 55 days on purchases||0% for 15 months||$0 for the first year ($149 after)|
|Coles No Annual Fee Mastercard||19.99%||Up to 55 days on purchases||0% for 12 months||$0|
|Qantas Premier Platinum||19.99%||Up to 55 days on purchases||0% for 18 months with 1% balance transfer fee||$225 for the first year ($299 after)|
|Citi Premier Card - Velocity Points Offer||21.49%||Up to 55 days on purchases||0% for 15 months||$300|
|Virgin Australia Velocity Flyer Card - Balance Transfer Offer||20.74%||Up to 55 days on purchases||0% for 28 months||$0 for the first year ($129 after)|
|St.George Amplify Platinum||19.49%||Up to 55 days on purchases||0% interest-free period for 24 months||$29 for the first year ($99 after)|
|Virgin Money No Annual Fee Credit Card||0% for 12 months, reverts to 18.99%||Up to 55 days on purchases||0% for 12 months||$0|
|American Express Qantas Business Rewards Card||0%||Up to 51 days on purchases||$450|
|Virgin Australia Velocity Flyer Card - Bonus Points Offer||20.74%||Up to 55 days on purchases||0% for 18 months||$64 for the first year ($129 after)|
|Citi Premier Card - Cashback Offer||21.49%||Up to 55 days on purchases||0% for 6 months||$150 for the first year ($300 after)|
|Qantas American Express Ultimate Card||20.74%||Up to 44 days on purchases||$450|
|Westpac Altitude Platinum Card||19.99%||Up to 45 days on purchases||0% for 24 months with 1% balance transfer fee||$49 for the first year ($150 after)|
|American Express Platinum Business Card||0%||Up to 55 days on purchases||$1,750|
|Westpac Altitude Black||19.99%||Up to 45 days on purchases||0% for 24 months with 1% balance transfer fee||$99 for the first year ($250 after)|
|American Express Platinum Edge Credit Card||20.74%||Up to 55 days on purchases||$195|
|Westpac Low-Rate Card Cashback Offer||13.74%||Up to 55 days on purchases||6.99% for 12 months||$59|
Step 4: Apply For A Credit Card
You can apply for a credit card by visiting a branch, over the phone, or online. To successfully apply, you must fulfil the eligibility criteria of the credit card provider and provide them with information and documents to convince them that you can make the repayments.
Usually, you get a response within 60 seconds of applying. However, the approval isn’t guaranteed, as your information and documents are first verified.
Once your application gets approved, you will receive your card in 5 to 10 business days. You can then activate and use it.
7. Credit Card Tips For Beginners
Finding the right credit card can be confusing, especially when it is your first time. Here are some considerations/tips to help you decide whether a credit card is for you.
Tip 1: Start by identifying your needs. Ask yourself questions to find out the type of credit card that will suit you the most.
Why do you require a credit card?
Are you capable of repaying it each month?
If you want a credit card to repay debt with a balance transfer offer, will you be able to repay it within the offer period?
Most credit cards have one main perk, such as a low-interest rate, low fees, or a rewards program. You can make the selection based on your spending and repayment habits.
Note that low-rate cards usually come with a yearly fee, so always ensure you shop around to find one that suits your budget.
Low annual fee cards allow you to use more funds to shop for things. However, as they come with a higher interest rate, consider them only when you have the confidence to pay off your monthly balance.
A rewards program is a good option for those who plan to use the card for daily spending. The more you use it, the more points you will earn. These cards usually have a higher annual fee, so ensure you repay the whole borrowed amount each month.
When applying for a credit card, companies usually ask you about their desired credit limit. Due to this, it is necessary to choose a credit limit you are comfortable with. It will help you avoid overspending and accruing debt you can’t repay.
Tip 2: Avoid unnecessary interest and fees by knowing when they apply. Visit the bank website to check the complete list of charges and terms and conditions.
Tip 3: Many banks introduce credit cards with an interest-free period. You can use it to your advantage.
Tip 4: Additionally, when selecting a credit card, make sure you thoroughly read through the features and terms and conditions to avoid transactions that incur an extra fee, such as:
Cash withdrawal from an ATM using your credit card
Transferring a current debt
Failing to make your monthly minimum card payment
Making foreign transactions
Knowing these fees will save you from incurring additional costs.
8. What Is Needed To Get A Credit Card?
You have to be over the age of 18 years and meet standard eligibility requirements such as proof of income, residency status, personal identification, credit history, and information about your existing debts, assets, and expenses.
To get a credit card with more benefits and features, you will have to meet stricter requirements than a typical credit card.
9. Is It Easy To Get A Credit Card In Australia?
You must meet the general eligibility requirements and research to identify the right credit card for your needs.
To meet eligibility criteria, you need to be above 18 years and provide necessary documents such as:
Two valid forms of government-issued Identity documents (Australian Driver’s Licence, Medicare card, Australian birth certificate, Australian passport)
Your existing online banking account details to confirm your income.
Once you fulfil the criteria, the next step is to select the best credit card considering your financial condition, spending habits, and how you will repay your credit card balance.
Once you have clarity on the type of credit card you need, explore the range of credit cards and compare them based on their fees, features, and benefits.
Banks generally provide a range of credit cards to accommodate everyone’s requirements. These include low-interest rates, low or no annual fees, rewards, frequent flyers, and balance transfers.
You can take the help of online comparison tools to find the one that matches your needs.
If you can’t pay the due balance monthly, you should look for a low-interest rate and fee card.
If you only need a credit card for emergencies and intend to pay the due balance in full, then a no-annual-fee card could be the right option.
If you want a credit card to pay off debt, look for the one with the lowest interest rate.
10. How Can I Get A Credit Card For The First Time?
Getting your first credit card can get a little tricky and confusing. The first step is to meet the eligibility criteria for your chosen credit card to get it approved.
Note that each credit provider may have set different requirements for their credit cards. So, visit the credit provider’s website and thoroughly review that you meet the criteria of the specific card you are applying for.
Here are the general eligibility requirements for credit cards:
Must be an Australian citizen or hold a valid visa and reside in Australia.
Must be of at least 18 years
Must fulfil minimum income requirements
Pass a credit check
If you meet the above criteria, go one step further and consider some general aspects to determine the best type of credit card for your use:
Fees: Check the fees payable, such as annual or monthly fees, late repayment fees, international transaction fees, cash advance fees, etc.
Interest-free period: This is the maximum number of days where you don't have to pay any interest on new purchases, provided you make full payment of your balance by the due date every month. Generally, it is up to 44 or 55 days on purchases.
Purchase rate: Credit card holders are charged if they don’t pay their balance in full by the due date.
Balance transfer period and revert rate: People who want a credit card with a balance transfer facility should check the duration of the offer and the revert rate.
Rewards and perks: Check rewards and other benefits such as free insurance etc.
Some banks also provide comparison tools on their website to compare the available options. However, if you wish to compare credit cards of different providers, you can use online Australian credit card comparison tools like Canstar, Mozo, etc., to find the best deal.
Having decided on the credit card to apply for, visit the credit card provider's website to apply for it online. You can also apply for your chosen card by visiting the nearest branch and completing the necessary paperwork.
11. How Do I Get My First Credit Card In Australia?
Knowing the exact eligibility criteria and preparing the required documents before applying will help increase your chances of getting your first credit card. We have outlined some tips for preparing you to apply for your first credit card.
Almost all banks ask for the same information and documentation, so it is good to have these ready before you begin the application process:
Before approving a credit card, creditors usually ask applicants to share some basic personal information on their application, which includes:
Number of dependants
Identification documents, such as your passport, driver’s license, or Medicare
In addition to the above, you need to provide information about your current savings, debts, and estimated weekly or monthly expenses, such as utility bills, mortgage, rent payments, and food costs. It will give them a clear picture of your present financial situation.
When applying, you will have to provide information regarding your employment history and present employment statuses, such as income, job title, workplace, and contact information for your employer.
You may require to attach your employment contract, payslips, or a recent tax assessment along with the credit card application.
Many people ask: “Can I get a credit card without a job?” If you are self-employed, Creditors may ask you to provide more information about your work.
The tax return and financials/profit and loss statements for the last two years to support your Self-Employed income.
Proof of rental income for real estate properties or copy of the executed lease
The last three months’ recent account income statements
The last three month’s account statements of any credit cards or loans held in your name
Creditors also analyze credit history and credit score to know how punctual applicants have been in repaying their loan instalments. If you have no loan in your name, this step is skipped.
An applicant with an excellent credit score is more likely to get approved for any financial product than one with an average or poor credit score.
Now that you know the credit card requirements, you need to identify the right credit card based on your spending style and financial needs. There is a wide variety of popular credit cards on the market, but they may not be the best for you.
12. How Much Income Do You Need For A Credit Card?
The income requirement varies by bank, so it is necessary to check the eligibility requirements on the bank website.
In the case of HSBC, you need to earn at least $40,000p .a. before tax to apply for a credit card.
In the case of Westpac, your monthly income has to be above $1,500 from the same verifiable employer, within Australia, for a minimum of the last three months.
To get an ING credit card, you need to earn $36,000 or more every year before tax.
Credit cards can be beneficial when used with caution, as they give you easy and fast access to the cash you might not have at that moment. However, the interest, including the associated fees, makes people reluctant to use it.
We hope you found the information and comparison of the best credit cards helpful. To select the best credit card, read the product information available on the card providers’ websites thoroughly before applying for one.
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