What to look for in a credit card
Shopping for a credit card may seem straightforward enough - until you start seriously looking around and realising that there are significant differences in many of the plastic products on offer. RateCity notes there are over 250 credit cards in Australia, all bombarding consumers with attractive 'take me home' offers.
There are cards with ridiculously low interest rates which jump up once they have lulled you into comfortable security. There are cards with low annual fees or no annual fees. Cards with glitzy rewards attached to feed a points-chasing habit. Cards offering all manner of instant rewards and discounts. Cards throwing themselves at your feet with balance transfer offers designed to stop you in your tracks. And the list goes on.
So how do you know which credit card is right for you?
The first thing you need to do is to determine what you want the card for. The next step, and this is crucial, is to pick the profile that best fits your spending and repayment habits. Credit card products are largely built to suit these spending types and if you narrow the search down you will immediately eliminate cards that are totally unsuitable for you.
Credit Card Profiles- Habitual Spender - Do you struggle to pay off your credit card and revolve the debt from month to month? Your best bet is to go for a low rate card with a very low or no annual fee. If you can get a card that offers instant rewards or discounts at places you regularly use, that's even better. Don't, however, be swayed by cards offering big rewards, as these usually come with big monthly interest rates, too.
- Impulse Spender - If you only use your card for emergencies and impulsive spending (such as Christmas shopping, holidays or sales) then spend the next few months paying off the balance, try to find a low rate card with a very low or no annual fee.
- Everyday Spender - If you use your card for regular purchases such as groceries and petrol and pay off your balance in full each month then you have a bit more breathing room since you don't have to worry about interest rates. Your challenge will be to find the card that provides the features you're interested in at the lowest cost. As you stick to a budget and are disciplined enough to pay in full you can afford to check out what rewards programs are on offer.
- Big Spender - If you earn and spend a lot of money on your credit card each year and always pay off your balance you might be in the market for a card that provides features and perks that you use frequently. These may include free travel insurance, concierge service and rewards program.
Credit cards basically offer you an unsecured line of credit. They are convenient and safe to use, whether shopping in person, by telephone or online. The cost of having access to this line of credit depends on your spending and repayment habits but, as a general rule, the faster you repay the borrowed amount, the less the card will cost.
How do I compare credit cards?RateCity is the best website to shop around on for all credit cards, as well as most other financial products. At RateCity, you can use expert comparative data from CANNEX, Australia's leading financial research and ratings firm. CANNEX has analysed and evaluated hundreds of financial products to award five stars to only the very best. The CANNEX star ratings go much further than just looking at interest rates. They also take into account important features so you can be confident you are getting the best product.
Use our easy search tools to compare credit cards at RateCity.
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