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If you’re considering applying for a credit card, there’s a lot to weigh up.

On one hand, you’ll enjoy the ease and convenience of being able to make large purchases without dipping into your savings; you’ll be able to shop online; and you’ll have access to credit in an emergency.

On the other hand, credit cards can come with hefty fees and interest charges. The most common fee incurred on credit cards is the annual fee.

For this reason, a number of credit card providers offer special low-annual-fee credit cards to make being a card owner a less costly endeavour (as well as to make their credit card more attractive in a competitive market). But in order to choose the right low-fee credit card, you'll first need to know the benefits of such a product and how to carry out a low-fee credit card comparison.

What are low-annual-fee credit cards?

Every card comes with a yearly fee that's supposed to cover the cost of the service provided by the issuer, or possibly any rewards programs or special privileges that come with the card.

Think of it like a holding cost you pay for owning the card – you have to pay rent when you move into someone else's property, and this is a similar principle.

While some credit cards charge hundreds of dollars for annual fees, low-fee credit cards keep this cost to a minimum, ensuring you don't pay excessively for extra costs. After all, depending on how you use your card, you may have to foot the bill for interest as well as charges like cash advances or late fees.

What are the benefits of low-annual-fee credit cards?

The biggest benefit of a low-fee credit cards is right there in its name: it offers a low annual fee. This means:

  • The less you spend on fees, the easier it is to get on top of your credit card debt
  • You could use the card as a relatively affordable line of credit for possible future emergencies

For these reasons, a low-fee card may be suitable for those who use their card every now and then rather than regularly. It might also be a good choice for a first credit card.

Some low-annual-fee credit cards offer an added incentive to customers by dangling the prospect of no annual fee whatsoever for the first year. This can be a tempting proposal, particularly if it's a low-balance-transfer-rate credit card that will let you pay off your other credit card debts more easily.

What should I look for when choosing a low-fee credit card?

There’s no doubt that a low-fee credit card is an attractive choice among credit cards. However, as with all financial decisions, you should still approach with an element of caution (and do some thorough research).

It’s important to note that many low-annual-fee credit cards lure you in with an attractive introductory offer (for example $0 for the first 12 months). This low fee then expires after a certain amount of time (in this case, 12 months), reverting to a higher annual fee thereafter. So, in many ways, you’re no better off than if you’d chosen a credit card with a standard fee.

Low-fee credit cards can also come with some hidden costs and fees.

If you don’t look closely at the fine print, you could be caught out paying more than you’d hoped (or budgeted) for. Here are some fees you should be aware of.

Inactivity fee

You possibly haven’t heard of this one. But an inactivity fee is charged on some credit cards if you don’t use your card for an extended period of time or fail to meet the spending limit for the year.

The inactivity fee is often waived for the first year of card membership, but every year thereafter can build up silently without you being aware of it.

The best way to avoid a nasty tally of inactivity fees? Read your credit card’s terms and conditions thoroughly, or ask a customer service representative from the financial institution to talk you through the finer details of fees on the credit card. That way, you should avoid any nasty surprises.

Statement fee

Financial institutions are making a big push towards going digital. This covers everything from online banking to online customer service to online statements. But what you might not know is that some banks actually charge a statement fee for having to physically post your monthly credit card statement to you.

Although it’s only around $2 per statement, it’s one of those hidden fees that you could avoid paying. Always make sure you’re aware of your chosen financial intuition’s policies and online platforms. If you don’t want to pay a statement fee, ask them to set you up on online banking, and seek assistance on receiving email statements instead of post.

Foreign transaction fee

The last thing you want when travelling overseas is getting hit with extra fees on your credit card. And this foreign transaction fee can be a common one to overlook.

It’s basically a fee charged by your bank when they’re forced to convert a transaction from one currency to another. For instance, imagine you use your Australian credit card to buy a scarf in British pounds. Your bank will need to make a conversion between Australian dollars and pounds in order to carry out the purchase. As a result, you could face a fee of 2-3 per cent of your total purchase. And this is on top of the exchange rate.

How do you avoid paying this fee? The best way would be to use a travel money card. These can be supplied through your existing bank and comes with very low transaction costs (sometimes 0 per cent). Over the course of a long holiday, you could save hundreds of dollars in fees.

What should I consider in a low-fee credit card comparison?

As with any credit card, you should carry out a comprehensive low-fee credit card comparison to make sure you choose a suitable product. Look at every part of the credit card, not just its headline fee.

Some low-fee credit cards come with higher purchase interest rates, which can end up more than offsetting the savings you make from paying a reduced fee. Also, just because a credit card has a low annual fee, it doesn't mean that the other charges will be equally miniscule. You can still pick up debt through fees on:

  • Late payments
  • Cash advances
  • ATM withdrawals
  • Foreign transactions

Finally, it's worth noting that rewards programs are rare on low-annual-fee credit cards. Low annual fee cards tend to be no-frills, bare-bones products that don't offer a heap of extras for additional spending. This type of product is more for the kind of card user who likes to stay out of debt and keep their finances in order.

So if you use your card sparingly and pay off your card in full on time each month, a low-annual-fee card may be right for you.

Frequently asked questions

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 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.

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.

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.

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.

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 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 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 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.

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.

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. 

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.

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.

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.

How do you cancel a credit card?

It’s important to cancel your old cards to avoid any additional fees. Unless you’re doing a balance transfer, you’ll need to pay the outstanding balance before you cancel your credit card. If you’ve opted for a card with reward points, make sure you redeem or transfer the points before you close your account. To avoid any bounced payments and save yourself an admin headache, redirect all your direct debits to a new card or account. Once you’ve done all the preparation, call your bank or credit card provider to get the cancellation underway. Once you receive a confirmation letter, destroy your card and make sure the numbers aren’t legible.

How to make a credit card online

If you’re wondering about how to make a credit card online application, here are some steps to follow:

  • Test the market. Many credit card options are available online. Compare providers by fees, interest and perks to ensure you’re getting the best deal.
  • Complete the application. Once you’ve selected a card, head to the provider’s website and complete the online credit card application form. Forms vary by providers.
  • Provide details. Most cards require you to meet age, residency, income and credit status condition, and you need to provide details like a bank account statement to prove this.
  • Review details. Ensure the information you’ve entered is correct.

Can I transfer money from my American Express credit card to my bank account?

If you’re an American Express credit card customer, you may not be able to transfer money from your credit card to your bank account. However, you may be eligible for cash advances, which involves withdrawing money through an ATM. 

To qualify for a cash advance, you’ll likely have to enrol for American Express Membership Rewards. Consider checking your online credit card account to see if you can withdraw a cash advance and, if so, the fees and charges you’ll incur for this transaction. 

You should remember that cash advances are different from balance transfers, which were available with some American Express credit cards earlier. Balance transfers allow customers to consolidate debt from high-interest credit cards to a credit card offering a lower interest rate. If you only recently applied for an American Express credit card, balance transfers may not be available irrespective of the card you own. 

How can I increase my Bankwest credit card limit?

When you apply for a Bankwest credit card, you get assigned a pre-set credit limit, which will end up being the most that you can spend on your credit card before having to pay it off. Your credit limit is chosen for you and your current financial situation, and you should remember not to overspend, irrespective of the limit, in order to avoid racking up a massive bill.

However, banks and lenders understand that your needs will change, and have made it possible for you to increase your credit card limit, allowing you to get extra cash when you need it most. Moreover, with a higher spending limit, you may be able to get access to certain perks and benefits with your Bankwest credit card.

To increase your Bankwest credit card limit, you can visit any of the bank’s branches or call 13 17 19 and follow the steps outlined.

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 I apply for a BOQ credit card limit increase?

If you’re an existing BOQ customer, you can request a BOQ credit card limit increase over a phone call. However, you should remember that owning and using a credit card is a matter of financial responsibility, so it might be worth thinking this decision through. 

When requesting a credit card limit increase, you’ll need to be just as responsible in terms of how much you earn and can set aside to repay the outstanding card balance. A credit card company may approve a credit limit increase only if you can show that you have either the income or the disposable income, which is the amount you have left after all expenses have been paid out.

For this purpose, you may need to submit your latest income documents and bank statements for an increase. You may want to estimate how much you usually have left after deducting your expenses, and then use this amount to try and convince the credit card company. Also, you may prefer to pay off the card balance in full each month and thus avoid paying interest on the card, helping you back up any claims of financial responsibility, as well. 

Remember that you may not be able to apply for a credit card limit increase beyond any limitations on the type of card you own. For instance, if you own a card whose ceiling is $10,000, and your current limit is $5,000, you won't likely be able to apply for a $10,000 credit card limit increase.