What's your spending style this holiday season?

What's your spending style this holiday season?

November 16, 2010

With Christmas on the way and the start of the holiday season approaching, spending season has begun. But if you don’t have any cash saved or your cash is sitting in a savings account earning a high interest rate, you can still make the most of this time of the year by choosing the best credit card for you.

To answer all of your shopping prayers RateCity has created a credit card shopper’s guide to help you choose the right card to suit your spending style this season. Whether you are a Christmas scrooge or shopping enthusiast, RateCity shows the best types of cards to save you money.

Christmas scrooge
In Charles Dickens’ A Christmas Carol, Ebenezer Scrooge ended up spending up big one Christmas after being a miser most of his life. If you don’t use your credit card very often but just use it to purchase a few presents to place under the Christmas tree, your credit card spending habits are more like Scrooge’s. But you may also strain to pay off your credit card when the first bill after Christmas arrives, so here’s the perfect type of card for you:

  • Suitable card: Search for a lowest-rate credit card with a low or no annual fee. Because you don’t use your card often, except at times of the year like now, it is hardly worth paying a high annual fee that you won’t get your money’s worth. The low interest rate will mean you won’t be stung with as much interest and it can help you to pay off your credit card balance sooner.

Seasonal splurger
You might have a bit of money saved for this festive season but plan to use your credit card while you’re on holidays and then pay off the entire balance over the next few months.

  • Suitable card: Try to find a low-rate card with very low annual fee so that you can save in interest and don’t pay for more than you need. You don’t need a card with an expensive rewards program because you don’t spend enough in a year to accumulate enough points to outweigh the expensive annual fee and interest.

Eager reindeer
You will be using your card for a majority of your shopping this Christmas or while on a well-deserved holiday. You aren’t too worried about the interest rate because you pay off your balance each month, but you’re more concerned about the features and fees of the card.

  • Suitable card: Choose a card with no annual fee because the higher interest rate won’t affect you if you pay off your balance each month. Some no annual fee cards come with rewards, which would be a bonus benefit.

Christmas enthusiast
You are a high-income earner whose credit card gets a good work-out, not only all year round but especially during the holiday season. However, you always pay off your balance (or the majority of it) each month because you can afford to pay it off.

  • Suitable card: Look for a credit card with a rewards program that you will get the most out of as well as features such as free travel insurance and complimentary concierge services.

No matter what your spending style is, find the right card this holiday season by comparing credit cards online.

 

 

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Learn more about credit cards

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. 

How do I apply for a credit card online?

Current Annual Fees

These are the current annual fees on your existing 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.

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 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.

Which credit card has the highest annual percentage rate?

The credit card market changes all the time, so the credit card with the highest annual percentage rate is also liable to change.

Keep in mind that credit card interest rates are expressed as a yearly rate, or annual percentage rate (APR). A low APR is generally good but also consider:

  • There can be different APR's for each feature of the card (e.g. purchases may have an APR of 14 per cent, while cash advances on same card could have an APR of 17 per cent.
  • Credit cards with a variable rate can change throughout the year, affecting your APR, so check the full details.
  • If you pay your balance in full every month, having the lowest APR is not as important as the other fees associated with the card. However, if you carry a balance from month to month, then you want the lowest APR possible.

What's the best credit card for rewards?

There is no one-size-fits-all best rewards credit card. It's best you research what type of rewards program you'd like, as well as the fees, interest rate and conditions associated with those types of cards before making a choice. 

Rewards credit cards can also come with high annual fees that may end up nullifying the rewards, so think how often you use the card to decide whether the benefits outweigh the extra cost for you. A card with a lower annual fee might require a lot of spending to get any useful rewards, while another card with a higher annual fee might need fewer purchases to get a reward. 

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.

How is credit card interest charged?

Your credit card will be charged interest when you don’t pay off the balance on your credit card. Your card provider or bank charges you the individual interest rate that is associated with your card, which is usually between 10 and 20 per cent. 

The interest will be added onto your bill each month or billing period if you don’t pay off the balance, unless you are in an interest-free period.

You will be charged interest on anything that hasn’t been paid for inside the interest-free period. Usually you will receive a notice on your bill or statement saying you will be charged interest so you have some form of notice before you’re charged.

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.

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.