If you are considering applying for a credit card, here is a quick checklist of things you need to consider before you take the leap:
What is the interest rate?
Credit card interest rates and interest-free periods will affect how quickly you can pay off your credit card purchases and how much debt you could incur when lumped with interest rates charges. So it's important to shop around for a credit card with a great low rate.
Does the financial institution charge an annual fee? How much is it?
Fees and charges quickly add up, so as well as checking interest rates, it's important to check if your financial institution charges an annual fee and how much it is. You don't want to be hit with costly annual fees if you rarely use your credit card.
What other fees do they charge?
The worst kind of fees are the ones you weren’t expecting, so make sure you ask about all the fees and charges that may be applied to your credit card. This could include fees for missed payments, cash advances, foreign transactions or exceeding your credit card limit.
What credit limit would you be comfortable with?
When it comes to the credit limit, choose a limit that you can pay off each month in full, otherwise you may get yourself into trouble and it could take you years to pay off. Remember, while a high credit card limit might look impressive it can be extremely detrimental if you find yourself succumbing to indulgent spending. Also – if you are applying for a home loan, lenders will take your credit card limit into consideration so try to keep it as low as possible.
What type of card will suit me best?
Figuring out which type of card will suit you best comes down to your individual spending patterns and needs. Take into consideration the card types and levels as well as the features, rewards and interest rates. Watch our spending profiles video to gauge which credit card would best suit you.
What level of card will suit me?
The level of credit card your choose will depend on your spend and how you plan to use your credit card. Each card comes with benefits including low interest rates or high rewards so it’s a matter of evaluating your spending habits first and then picking a card to match. And always make sure you read the product disclosure statement (PDS) before you apply for a credit card so you are aware of all the terms and conditions attached to the card.
Walk through the complete Home Loans Step by Step guides below;
Credit Cards Guide - Step 1 of 7 - Usage
Credit Cards Guide - Step 2 of 7 - Interest
Credit Cards Guide - Step 3 of 7 - Rewards
Credit Cards Guide - Step 4 of 7 - Features
Credit Cards Guide - Step 5 of 7 - Brands
Credit Cards Guide - Step 6 of 7 - Type
Credit Cards Guide - Step 7 of 7 - Checklist