powering smart financial decisions

Racking up the credit cards

Racking up the credit cards

Are you collecting credit cards at the same rate the Kardashian women are collecting husbands? It might be time to consider a different hobby, one less embedded in steep debt.

There are a number of reasons why some people may have multiple credit cards, but having more than a number of credit cards can have its disadvantages. 

You pay more

If you have more than one credit card, you are usually paying annual fees for each card, meaning that you could be paying double or triple the amount in fees. Also depending on how many cards you have and what the outstanding balance is for each, you are being charged interest three times, on the balance of each card.

Lose control

Just by having more than one credit card it makes it harder for you to get your debt under control and pay it all off. Some people struggle to pay off one card let alone two or three.

Can affect your credit rating

Each time you apply for a new credit card, your credit file is marked. If you decide to apply for a loan such as a home loan in the near future, it could affect this.

However, the good news is there is still something you can do to get your credit card debt under control, even if you have multiple credit cards.


Consider consolidating your multiple credit cards and transferring the balances onto one card with a balance transfer. Balance transfer credit cards are a great way to focus on paying off your debt without paying a higher interest rate. They usually offer a low or no interest for a certain period, such as zero percent for six months. Compare balance transfer credit cards online and see how much you can save.

Pay down your debts

It may be necessary to set yourself a budget to work out how much you can afford to pay off your credit cards each month. Whether you decide to take out a balance transfer card, or not, work on paying off your card/s as soon as you can and save yourself in interest at the same time.

Pay more than the minimum

If you can’t pay off the total outstanding balance each month try to pay more than the minimum repayment required in order to pay it off sooner rather than later. Generally the minimum repayment is approximately 2 percent of the total balance, so if you only paid this each month it could take you years to pay off.

RateCity.com.au has its eyes on some of the best credit card deals in Australia. To compare these great deals just visit our credit card comparison page.

Did you find this helpful? Why not share this article?



Money Health Newsletter

Subscribe for news, tips and expert opinions to help you make smarter financial decisions

By signing up, you agree to the RateCity Privacy Policy, Terms of Use and Disclaimer.


Learn more about credit cards

What is a balance transfer credit card?

A balance transfer credit card lets you transfer your debt balance from one credit card to another. A balance transfer credit card generally has a 0 per cent interest rate for a set period of time. When you roll your debt balance over to a new credit card, you’ll be able to take advantage of the interest-free period to pay your credit card debt off faster without accruing additional interest charges. If your application is approved, the provider will pay out your old credit card and transfer your debt balance over to the new card. 

How do you use a credit card?

Credit cards are a quick and convenient way to pay for items in store, online or over the phone. You can use a credit card as a cashless way to pay for goods or services, both locally and overseas. You can also use a credit card to make a cash advance, which gives you the flexibility to withdraw cash from your credit card account. Because a credit card uses the bank’s funds instead of your own, you will be charged interest on the money you spend – unless you pay off the entire debt within the interest-free period. If you pay the minimum monthly repayment, you will be charged interest. There are many different credit card options on the market, all offering different interest rates and reward options.

How do you use credit cards?

A credit card can be an easy way to make purchases online, in person or over the phone. When used properly, a credit card can even help you manage your cash flow. But before applying for a credit card, it’s good to know how they work. A credit card is essentially a personal line of credit which lets you buy things and pay for them later. As a card holder, you’ll be given a credit limit and (potentially) charged interest on the money the bank lends you. At the end of each billing period, the bank will send you a statement which shows your outstanding balance and the minimum amount you need to pay back. If you don’t pay back the full balance amount, the bank will begin charging you interest.

How easy is it to get a credit card?

For most Australians, there are no great barriers to applying for and getting approved for a credit card. Here are some points that a lender will consider when assessing your credit card application.

Credit score: A bad credit score is not the be all and end all of your application, but it may stop you being approved for a higher credit limit. If your credit score is less than perfect, apply for the credit limit that you need, rather than the one you want.

Annual income: Most credit cards have minimum annual income requirements. Make sure you’re applying for a card where you meet the minimum.

Age & residency: You need to be at least 18 years old to apply for a credit card in Australia, and most require that you are an Australian citizen or permanent resident. However, there are some credit cards available to temporary residents.