Compare cards with a reduced purchase rate for 18 months
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Should you get a credit card during uni?
As another year of university starts again, many young Aussies may be asking themselves how they’ll be able to afford the costs that come with schooling. One option students may turn to is taking out a credit card. But is this really the best option for your schooling years?
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.
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.
To get a new credit card, generally you need to be at least 18 years old and have a good credit rating. You don’t need to be an Australian citizen. Usually you can apply online or in person at a branch of the card issuer. You’ll typically have to supply information like:
- What you regularly earn (e.g. wages, salary) and what you regularly spend (e.g. rent/mortgage, loan repayments, living expenses)
- Your employer’s contact details
- Details of your assets and any debts you are paying off
Before applying for any credit card, be sure you can afford the repayments. It also helps to do some research, comparing different credit cards and what they offer in terms of fees, interest, rewards etc.