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How to Choose the Right Credit Card in Australia

Choosing the right credit card depends on how you plan to use it. If you carry a balance from month to month, a low rate credit card with a purchase rate under 15% will save you significant interest. If you pay your balance in full each month, a rewards card can earn you points, cashback or frequent flyer miles on your everyday spending.

Low rate credit cards

Low rate credit cards typically charge between 8% and 15% per annum on purchases — significantly less than the standard rate of 19-22%. They usually come with a modest annual fee and no rewards program, making them ideal for people who occasionally carry a balance and want to minimise interest charges.

Rewards credit cards

Rewards cards earn points on your spending which can be redeemed for flights, gift cards, merchandise or cashback. Popular programs in Australia include Qantas Frequent Flyer, Velocity, ANZ Rewards and CommBank Awards. Rewards cards typically charge higher interest rates and annual fees, so they only make financial sense if you pay your balance in full each month.

Balance transfer credit cards

Balance transfer cards allow you to move existing credit card debt to a new card at a lower — sometimes 0% — promotional rate for a set period, typically 6 to 24 months. This can save significant interest while you pay down the debt. Be aware that after the promotional period ends the rate usually reverts to the standard purchase rate.

What is the interest free period?

The interest free period — typically 44 to 55 days — is the window during which you can make purchases and pay no interest, provided you pay your full balance by the due date each month. The longer the interest free period, the more time you have to pay without incurring charges.

All information is general in nature and does not constitute financial advice. Please consult a licensed financial adviser before applying for any credit product.