How to choose the right credit card for your lifestyle

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April 21, 2010

Choosing a credit card can sometimes be an overwhelming challenge, especially when there are so many cards on the market. So how do you know which one is perfect for you? RateCity gives you some tips on choosing the right card to suit your way of life.

Credit cards are a necessary evil for most; we know that we should cut them up and never use them but some of us rely on them as backup when our cash is getting low. Others, meanwhile, use them mainly to benefit from the rewards points on offer. No matter what your reason, here are some questions to ask yourself to help you finding the right card.

How often do you plan to use it?
If you use it continually then opt for a card with a low interest rate, a long interest-free period and a rewards program. If you hardly use it, or just want it there “just in case” then most of the benefits will not appeal to you, look for a card that has no or low annual fees, a low interest rate and longer interest-free periods allow you to pay back your purchases without paying any or minimal interest.

Why do you need the card?
Work out exactly what you want to use it for. For instance if you plan on using it to only be able to purchase concert tickets online then there’s no point going with a card with a high annual fee and excessive features which you’ll never use. Instead, look for a card that has a no annual fee or a low one, and a low interest rate.

Will you require cash withdrawals?
If you think that you will need cash withdrawals then look for a card that has a low interest rate for cash advances. Most credit card providers charge a much higher rate for cash advances than they do for purchases. Also there are usually no interest-free periods for cash advances so you will start paying interest as soon as you withdraw the money.

Is your interest rate too high to handle?
If the answer is yes then why not look at a low rate balance transfer credit card, such as Bank SA’s Amplify Credit Card with a low 0.99 percent for six months. Make sure you keep your eye on the revert rate though, as this is the interest rate you will be charged for on purchases once the intro period expires. To find a card to suit you, compare online at RateCity.

What type of rewards program will suit me?
Many cards offer a rewards program, with some institutions offering frequent flyer reward points while others offer point systems where you can shop online to redeem points. For example, the NAB Velocity Standard American Express offers 1.5 Velocity points per $2 spent on purchases; you can redeem these points for Virgin domestic or international flights or go shopping on their site. Work out which rewards will work for you when choosing your credit card.


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^Words such as "top", "best", "cheapest" or "lowest" are not a recommendation or rating of products. This page compares a range of products from selected providers and not all products or providers are included in the comparison. There is no such thing as a 'one- size-fits-all' financial product. The best loan, credit card, superannuation account or bank account for you might not be the best choice for someone else. Before selecting any financial product you should read the fine print carefully, including the product disclosure statement, fact sheet or terms and conditions document and obtain professional financial advice on whether a product is right for you and your finances.

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