Getting your first credit card is a little bit like getting your first car: it gives you freedom but also comes with huge responsibility.
Here's a quick rundown of the ins and outs of getting your first credit card.
What things should I look for when choosing my first credit card?
Paying with a credit card is incredibly handy; as well as giving you access to emergency funds, it also offers protection from carrying around large sums of money.
However, it has the potential to be risky if you’re not good about managing your money. That’s why it’s a good idea to start out small, so instead of looking at credit cards with lots of bells and whistles, it might be better to think about getting a no-frills credit card as your first credit card.
Here are some things you might want on your first credit card:
Low or no fees: There are plenty of credit cards that come with no annual fee. To see what’s currently available, click here.
Low interest rate: Avoid paying high interest on purchases by choosing a card with a competitive interest rate.
Low credit limit: There are credit cards that have a credit limit of under $1,000. If you start out small, you’re less likely to have trouble paying off your credit card bill on time.
Many credit cards also offer rewards, including frequent flyer points, cash-back and department store credit.
If you want your first credit card to be one that offers benefits, don’t forget that you’ll have to pay for the privilege in the form of higher fees and/or higher interest rates. So make sure you plan to use any perks, and be aware that you may be required to spend thousands of dollars on your card to redeem them.
Ratecity has a credit card comparison tool, where you can see the key differences between credit cards.
Do I need a good credit score to get my first credit card?
If you’ve never applied for a credit card before, chances are you won’t have much of a credit history. This means you may have a low or even no ‘credit score’, which is a number that signifies your trustworthiness as a borrower.
Don’t worry – financial institutions will still consider offering you your first credit card, provided you don’t have any bad debt hanging over your head. Click here to check your score for free.
How can I apply for my first credit card?
You must be 18 years or older and be able prove you have a reliable income.
If you’re a student, you’ll usually need to prove you’re studying at an eligible Australian educational institution and earn a minimum amount (often at least $15,000 per year) from working, a Youth Allowance or Austudy.
Banks and credit unions offer credit cards. You can apply for one in person at a branch, or online. Document and details you will need:
- Australian driver’s licence or passport
- Details of your income, expenses, assets and liabilities
- Two recent payslips for income verification
- If you’re self-employed, you’ll need your accountant’s phone number
Wait times can vary between providers, but if your application is approved your first credit card should usually arrive within five to 10 business days.
Tips for using your first credit card
- Try not to treat your credit card like an easy loan. Only buy things you can afford.
- Always try to pay your statement balance in fulleach month. If you only make the minimum payment, you’ll end up paying interest.
- Don't spend more than your credit limitor you'll face penalty fees.
- Consider setting up a direct debit, so you never miss a payment.
- If you can't pay the balance in full, pay off what you can. If you miss the minimum repayments, you could be slugged with a penalty fee and it could affect your credit score.
- Try to never withdraw cashon a credit card. You’re usually charged a higher interest rate than on purchases, as well as a handling fee.