Understanding Australian Credit Cards

By: The Credit Card Guide

Understanding your credit cards is the key to getting the most out of your money.

So we thought it would be best to give you an idea of the different categories of credit cards available in the credit card market in Australia. So here goes …

DEBIT CARDS
Debit cards are the new best friend to any cautious spenders out there. These cards take the worry out of spending by credit card as you’re limited to using your own money. Most times you can get a debit card just by asking for one at your bank. This will join onto your checking account.

Ideal for those who want to make credit card purchases, but cannot because they haven’t got one, cannot get one, or just do not want a credit card (such as students, for example), debit cards give you the freedom to spend without added concern.

STUDENT CREDIT CARDS
As a student, most banks will be fairly understanding of your lack of credit status/history (for most people, none) or steady source of income. That’s why most banks offer varying qualification criteria for their usual credit cards. So do not be intimidated by the fact that only work part time, or have not had a credit card before.

But here is a word from the wise – although the more flexible qualification criteria, some student credit cards are not necessarily the best choice, saving wise. Therefore, be sure to keep an eye for credit cards that offer low interest rates and do not require specific income levels.

BALANCE TRANSFER CREDIT CARDS
Balance transfers are the helping hand for all those out there who have accumulated a large balance on their credit card and cannot seem to keep it under control. Whether it be through interest rate hikes or credit cards that are just too expensive in general.

These days a lot of banks are offering credit cards with very low rates (ranging from 0% to 10%) of the balances that are transferred, giving a rate much cheaper rate on your credit card balance and resulting in you being able to pay off your debt faster.

All you need to remember is to shop around – some cards may attract you with a low rate for a few months and then charge (in some cases) up to 21% which is just ridiculous. So make sure you do all your calculations and work how much time you think you will need to pay off our balance, then the balance transfer credit card will be most beneficial to you.

REWARDS CREDIT CARDS
Ah Rewards Cards … probably the most difficult of all. When it comes to these cards, it helps if you already know what you want. Do not be fooled by the cards that offer a lot of points per dollar that you spend, as much of the time the redemption rate (which is the telling factor of how valuable a rewards credit card is) means you have to spend a few thousand dollars (in some cases) to obtain a reward.

Of course not all cards are like that. In fact, some are really very good, such as the rewards program at St. George. This program differs from most because it offers instant discounts on a wide range of retailers when using a St. George rewards credit card to make your purchase.

Other credit cards are offered, such as the ANZ Balance Visa, allow you to earn reward points on payments made to your bill (this includes cash advances and balance transfers). As a result, you’re encouraged (and more likely) to make repayments instead of spending up large in order to get prizes that normally would cost you less than a third the price in the rewards program.

GOLD CREDIT CARDS
Gold credit cards are offer more benefits and features, which are not usually available on a standard card. These may include (but are not limited to) travel insurance, purchase protection, cash back, extended warranty on purchases made with your gold credit card, as well as rewards programs.

Of course, these cards come with a bigger price tag, which is to be expected when the value of the card increases. As with all credit cards, it pays to shop around, because when it comes to Gold credit cards there is such a large scale of cards ranging from great value to complete rip off.

If you are seriously looking at getting a gold credit card, it may also be a good idea to take a look at some platinum credit cards as well, because some actually work out to be much cheaper than what you expect – sometimes even cheaper than some credits gold cards.

LOW INTEREST CREDIT CARDS
If you’re not fussed about prizes or additional insurance, a credit card with a low interest rate is probably one of the best financial instrument that may have in your portfolio, especially if you have interest free days included. These types of cards allow you to make purchases without the stress of a high interest rate to send their balance through the roof.

So if you pay the balance in full each month (and making full use of the interest free days available on your credit card), you will end with a nice and cheap credit card bill!

Interest rates like this can be found on the cards as the Aussie MasterCard and the BankWest Lite MasterCard. These credit cards offer very low interest rates, for example 9.99%, which is no more than half of what most other credit cards out of this category charge.

FREQUENT FLYER CREDIT CARDS
As is the case with credit cards rewards, when trying to choose a frequent flyer card it’s very important to know what you’re looking for so you can get more for your money.

Accumulation of frequent flyer miles work the same way as rewards points, in the way you need to make sure the conversion rate to Air points (if the points earned are not direct air points), and also the rate of redemption for points on those flights that you are likely to purchase a ticket for.

LOW ANNUAL FEE CREDIT CARDS
When it comes to Australian credit cards, low annual rate credit cards are a bit more of a trick, as they often exclude essential elements (like interest-free days) in order to provide a low (or no) annual fee.

For example, the Westpac No Annual Fee MasterCard gives an annual fee of $0 with no interest free days and 18.24% p.a. for cash advances and 19.99% p.a. for purchases (which is very high for a card that offers almost no other benefits).

On the other hand, you have the Bendigo RSPCA Rescue credit card that offers a low annual fee of only $24 and up to 40 days without interest charges. Not to mention low interest rates of just 7.45% during the first 6 months (after which it increases to only 14.05%, which is the same as the cash advance fee).

PLATINUM CREDIT CARDS
If you plan to spend a lot of money on your credit card and want to maximize the benefits available then a platinum credit card is a good choice for you. They come with all the same benefits you gain with a gold credit card, and more. And the benefits are available for longer periods of time and much higher values.

Platinum credit cards often have a minimum income requirement in order to safeguard the banks from the high credit limits that they offer. Of course, this is not always the case, and income requirements are not always as high as you may expect.

INTEREST FREE CREDIT CARDS
The interest free credit cards category is an odd one, as most credit cards come with interest free days anyway. However, it remains worthy of an explanation…

Interest-free days (on credit cards in Australia) can vary between 40 to 62 days. The one thing that is very important to remember with such cards is that you MUST pay your monthly balance in full, otherwise you will end up being charged the full amount of interest on any purchases made.

CASH BACK
There are plenty of credit cards offered in Australia that give a cash refund as part of their reward programs. The process of choosing a credit card that offers a cash refund is much like choosing a credit card with rewards or frequent flyer points – you’ve got to weigh up your options.

Will the amount of money that is needed to be spent in order to get a cash back reward beneficial for you in relation to how much cash back you’ll actually get?

So there you have it, the world of credit cards in Australia in plain view. Just remember that the key is knowing what you want, and making sure you have every detail. Because when it comes to your money, you can never be too careful.

Article Source:
http://www.articledashboard.com/Article/Understanding-Australian-Credit-Cards/1228401

www.thecreditcardguide.com.au/“>The Credit Card Guide is an online resource for all those in search for an Australian Credit Card. We provide reliable, honest reviews on a range of over 90 credit cards, from www.thecreditcardguide.com.au/category/low-interest-credit-cards/“>low interest to www.thecreditcardguide.com.au/category/platinum-credit-cards/“>platinum credit cards.