Ten interesting facts about credit cards

Ten interesting facts about credit cards

For many people who own a credit card, receiving your statement can sometimes be the opposite of fun. But, these plastic cards have a long history and have evolved exceptionally over time.

Here are ten interesting facts about credit cards you probably didn’t know that might change your perception of them!

Fact 1 – Credit cards were designed as loyalty cards

Initially, credit cards were created to be very similar to the modern loyalty card. The concept was introduced for the very first time in the 1950s by The Diner’s Club and was eligible to be used at 27 different restaurants in New York City. The Diner’s Club had a resounding 1.3 million cardholders by the mid-1960s.

Fact 2 – VISA stands for Visa International Service Association 

The VISA card was first founded by the Bank of America, and the logo colours of blue and gold symbolise the sky and iconic hills of California. It was first introduced in 1958 as BankAmericard and later became VISA in 1976.

Fact 3 – The first cardless transaction occurred at a petrol station 

In 1997, Mobil, a petrol company, introduced a system called Speedpass, which enabled customers to carry out quick and contactless payments at Mobil petrol stations.

Fact 4 – Credit cards are one of the most popular payment options in Australia

There are over 19 million credit cards in Australia in 2020, which nets to approximately $29.5 billion accruing interest. There is almost one credit card for every adult Australian, according to the RBA!

Fact 5 – Physical credit cards are the same size all over the world

One of the reasons why credit cards are so popular is because they can be used globally, as they have a universal sizing which has been governed by the ISO 7810 international standard.

Fact 6 – Credit card numbers can be validated via a checksum formula

To check if a credit card is valid or not, you can use the Luhn algorithm that uses the checksum formula. Starting from the right, you need to double every second digit. For example, if the number is 1111, it would become 2121. Then, you need to add all of the resulting digits. If the sum of the digits is divisible by 10, then the credit number is valid. If not, it’s an invalid credit card number. By using this algorithm, merchants can verify the validity of a card number before accepting the customer's payment, which helps them avoid credit card fraud.

Fact 7 – All credit card issuers are required to provide a credit card key factsheet 

When you apply for a credit card, the lender should give you a ‘key factsheet’ to answer the following questions:

  • How will the minimum repayment be calculated?
  • Is the interest rate applicable for both purchases and cash advances?
  • What is the interest rate that is applied to bank transfers?
  • What is the promotion rate, if applicable?
  • What is the length of the interest-free period, if applicable?
  • What are the annual and late fees, if applicable? 

It might be helpful to carefully read these key facts about the credit card while comparing your options to find the right credit card for you.

Fact 8 – If you pay more than your minimum repayment, you can limit your interest charges

If you only pay the minimum amount due for your credit card each month, it will take you longer to pay off the balance. This usually results in you paying more interest. Instead of paying just the minimum amount, try paying however much extra you can afford. Your monthly credit card statement must tell you how long it will take you to pay off your entire balance by only making minimum monthly repayments. Use this information while determining the amount you choose to pay every month.

Fact 9 – You can modify your credit card options online

Gone are the days where you need to rush to your lender’s office to cancel your card or change your credit limit. If you’ve used your credit card after 1st January 2019, your credit card provider must give you the option to cancel your card and even increase or decrease your limit online.

Fact 10 – Interest rates differ from lender to lender

The interest rate charged to every payment you make using your credit card is different from one lender to another. And, the interest rate charged plays a huge role in the amount you need to repay after making a purchase. At the time of writing, the average credit card standard interest rate is 19.77 per cent; however, the average low-interest credit card rate is 13.03 per cent as per the RBA.

It's recommended to browse through various credit card providers before choosing a credit card that suits your needs and provides the best repayment options.

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Learn more about credit cards

How many numbers are on a credit card?

The numbers on your credit card actually follow a universal standard which is used to identify specific functions. Each credit card has a different amount of numbers. Visa and Mastercard have 16, American Express has 15 and Diner’s Club has 14. 

The first number on a credit card always identifies what type of credit card it is. Visa cards start with a 4, whereas Mastercard starts with a 5 and American Express with a 3. The remainder of the digits represent the account number, including the last number which is used to verify that your credit card is actually valid. 

Credit cards also have additional verification numbers, which are mainly used when the card isn’t present for phone and online purchases. These are the three-digit numbers on the back of Visa and MasterCard or the four-digit numbers on the front of an American Express card.

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 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 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.

What should you do if your credit card is compromised?

Credit card fraud is a serious problem. If your credit card is compromised and you’re wondering what to do, here are a few precautionary steps to take.

Contact you credit provider – Get in touch will your credit card provider. If you feel your card has been compromised, you should be able to lock or block it.

Monitor your accounts – Keep an eye on your credit card accounts. Any unauthorised transactions could be a sign your credit card has been compromised.

Check your credit rating – It’s also important to check your credit rating, to ensure you’re not a victim of identity theft or some other financial mischief.

Should I get a credit card?

Once you've compared credit card interest rates and deals and found the right card for you, the actual process of getting a credit card is quite straightforward. You can apply for a credit card online, over the phone or in person at a bank branch. 

What should you do when you lose your credit card?

Losing your credit card is a serious situation, and could land you in financial trouble. Here is a simple guide detailing what to do when you lose your credit card.

Lock you card – Contact your provider and inform them about your lost credit card. From here lock, block or cancel your card.

Keep track of transactions – Look out for unauthorised credit card transactions. Most banks protect against fraudulent transactions.

Address recurring charges – If your card is linked to recurring charges (gym membership, rent, utilities), contact those businesses.

Check credit rate – To ensure you’re not the victim of identity theft, check your credit rating a month or two after you lose your credit card.

Does ING increase credit card limits?

You may want to increase your credit card limit for many reasons, such as having access to more spending money. However, if you are using the Orange One credit card issued by ING, you may not be able to do so. 

ING customers can choose a credit limit of their preference when applying for the Orange One credit card. Depending on your financial situation, this limit can be anywhere between $1,000 and $30,000. If you qualify for a Rewards Platinum card, the minimum credit card limit will likely be $6,000. 

Ideally, you should set your credit card limit knowing how much you can afford to repay each month and keep your expenses lower than this level. With most credit cards, you should have the option of requesting a credit card limit increase at a later time, although you will need to qualify for any increase. With an ING credit card, limit increases are out of the question (at the time this was published), which means you may want to apply for a higher credit card limit from the beginning. Remember that you have the option of decreasing your ING credit card limit at a later time.

What should I do if my ANZ credit card has expired?

Your ANZ credit card is considered expired only after the last day of the month and year marked on your card. For instance, if your card’s expiry date reads 03/22, it is valid until 31 March 2022 and expires on 1 April 2022. Typically, you should have received a new credit card by that date, and you won’t have to request a new card. 

Once you get the new card, you should remember to switch any automatic payments you have - such as a utility or mobile phone bill - from your expired credit card to your new credit card. Equally, if you are using CardPay Direct to repay your ANZ credit card debt, you may need to update the credit card account details for that service as well. 

In case the new card doesn’t arrive by the expiry date of your current credit card, you can call ANZ on 13 22 73 to find out the reason and if you need to request an expedited card. Please note that if you were planning to close your credit card account or request a credit card upgrade, you may need to call ANZ at least before the 25th of the month your current credit card expires in, as that’s when they may send you the new credit card.

Can a pensioner get a credit card?

It is possible to get a credit card as a pensioner. There are some factors to keep in mind, including:

  • Annual income. Look for credit cards with minimum annual income requirements you can meet. 
  • Annual fees. If high fees are a concern for you, opt for a card with a low or $0 annual fee. 
  • Interest rate. Make sure you won’t have any nasty surprises on your credit card bill. Compare cards with a low interest rates to minimise risk.

How do you apply for a credit card?

You can apply for a credit card online, over the phone or in person at the bank. Once you’ve compared the current credit card offers, the application process is quick and easy. Before you get your application started, you’ll need to gather your personal information like proof of ID, payslips and bank statements, proof of employment and details of your income, assets and liabilities. To be eligible for a credit card, you’ll need to be an Australian citizen over 18 and earn a minimum of $15,000 each year. Once you’ve applied for a credit card, you should get a response fairly instantly. If your credit card application has been approved, you should receive a welcome pack with your new credit card within 10-15 days.

How to pay a credit card

There are a few ways to pay a credit card bill. These include:

  • BPAY - allows you to safely make credit card payments online.
  • Direct debits - set up an automatic payment from your bank account to pay your credit card bill each month. You can choose how much you want to pay of your credit card bill when you set up the auto payments.
  • In a branch.
  • Via your credit card provider's app.

How to get a credit card for the first time

A credit card can be a useful financial tool, provided you understand the risks and can meet repayment obligations.

If you’re a credit card first-timer, review your options. Think about what kind of credit card would suit your lifestyle, and compare providers by fees, perks and repayments.

Once you’ve selected a card, it’s time to apply. Credit card applications can generally be completed in store, online or over the phone.

When you apply for a credit card for the first time, you must meet age, residency and income requirements. As proof, you must also provide documentation such as bank account statements.

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.