Compare cards with a reduced purchase rate for 18 months
CUA Low Rate Credit Card
Balance Transfer0% p.a. on balance transfers for 13 months. $0 annual fee for the first year
for 12 months then $49
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Millennials shop around for credit cards as spending patterns change
As spending habits shift due to COVID-19, millennials are shopping around for another credit card, with reward programs topping their wishlists.
If you’ve got an outstanding credit card balance or you’re planning to use your credit card to purchase a big-ticket item, you might want to consider credit cards that offer low interest on purchases for at least 18 months.
A credit card with low interest on purchases for at least 18 months can help you pay off your credit card balance faster by saving you interest. Because you’re paying less interest, switching to a credit card with low interest on purchases for at least 18 months can help you pay down your credit card debt faster.
Read on to find out if a credit card with low interest on purchases for at least 18 months will work for you.
What is a low-interest-rate credit card?
Low-interest-rate credit cards, like those with low interest on purchases for at least 18 months, typically offer cardholders a lower ongoing interest rate than other cards. Low-interest-rate credit cards tend to sit around the 10 per cent interest rate, which is considerably lower than a lot of other cards on the market.
Depending on the type of credit card you choose, the low-interest rate is usually only valid for a period of time. Credit cards with low interest on purchases for at least 18 months give you a longer grace period to pay off your credit debt without adding extra interest charges to the bottom line.
Credit cards with low interest on purchases for at least 18 months can be very useful for borrowers that don’t manage to pay off the whole balance each month. Over time, the interest you owe compounds, which can make it difficult to get ahead and pay down the credit card debt. By giving yourself at least 18 months of low interest, you’ve got a bit more flexibility to pay off the card balance, without the interest accumulating as fast as other cards.
While credit cards with low interest on purchases for at least 18 months can be useful, in some circumstances it may make better sense to compare your options. For example, if you’ve got an existing credit card debt, it might be better to opt for a balance transfer to a card with a 0 per cent interest rate. Depending on both the amount you owe, as well as your personal circumstances, a low interest personal loan might better suit you. Either way, before you choose a credit card with a low interest on purchases for at least 18 months, spend some time comparing your options.
How to compare credit cards with low interest on purchases for at least 18 months
Applying for too many credit cards can have a negative impact on your credit score. To avoid application overload, it pays to find a card that ticks a few boxes. Here’s what you should consider when comparing credit cards with low interest on purchases for at least 18 months.
The interest rate is a major factor to consider. As these cards have low interest for a period of 18 months, check what the standard interest rate reverts to after the introductory period ends. This is especially relevant if you don’t anticipate paying the bulk of the balance down within the 18 months. In most cases, the standard rate is considerably higher than the low interest rate for 18 months, so always compare the before and after to make sure you’re not going to get stung.
It’s not just low interest rates that make a credit card appealing. Check whether the card has annual or ongoing fees. If there’s an annual card fee, make sure it doesn’t wipe out any potential benefits from the low interest rate. Other rates and fees to consider are cash advance interest rates, overseas transaction fees, and late or missed payment fees.
If you’re looking for a credit card that can help you save interest, check to see if the card offers any interest-free days. Interest-free days are a grace period where you have an opportunity to pay the full credit card balance without accruing any interest. If you don’t manage to pay the full balance, you’ll pay interest on the outstanding amount.
Other factors to compare are any complimentary extras like reward or bonus points, free travel insurance or a concierge service. It’s unlikely that a credit card with low interest on purchases for at least 18 months will offer these perks, but other cards may offer a low rate as well as other features.
It’s worth noting that most credit cards with low interest on purchases for at least 18 months tend to have less features than premium cards. While you’ll pay less interest on purchases for at least 18 months, you're also less likely to earn reward or bonus points.
Property Personal Finance Writer
A property and personal finance writer, Nick Bendel covers property, loans, credit cards, superannuation, and other bank products. Nick has previously written for The Adviser, Mortgage Business, Lifehacker, Business Insider, Yahoo Finance, and InvestorDaily, and loves getting elbow-deep in the latest ABS, APRA and RBA data.
The reason Equifax, Experian and Illion use different scores is because they are independent companies with their own different methodologies. As a result, a score of, say, 700 would mean different things at different credit reporting bureaus.
However, the one thing they have in common is that they divide their scores into five tiers. So if you receive a tier-two credit score from one bureau, you will probably receive a tier-two score from the others, as well.
Yes, as credit card providers look at your annual income amount as well as your occupation. Minimum income requirements tend to be between $30,000 – $40,000 for standard and rewards credit cards, however low income credit cards can have minimum income requirements as low as $15,000 per year.
If you have a bad credit score, you might encounter two main problems. First, the lower your credit score, the more likely you are to be rejected when you apply for a loan or any other credit product. Second, if your application is accepted, the less likely you are to qualify for the lowest interest rates.
There are two reasons you should check your credit rating: so you have a better understanding of your financial position, and so you can take action (if necessary) to improve your credit rating.
Lenders use credit ratings or credit scores to assess loan applications. The higher your score, the more likely you are to get approved, and the more likely you are to be charged lower interest rates and lower fees. Conversely, the lower your credit score, the less likely you are to get approved, and the more likely you are to be charged higher interest rates and higher fees.
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.
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.
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.
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.
Think of credit cards as a short-term loan where you use the bank’s money to buy something up front and then pay for it later. Unlike a debit card which uses your own money to pay, a credit card essentially borrows the bank’s money to fund the purchase. When you apply for a credit card, the bank assesses your income and assigns you a credit limit based on what you can afford to pay back. At the end of each billing cycle, which is usually monthly, the bank will send you a statement showing the minimum amount you have to pay back, including any interest payable on the balance.
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.