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FAQs
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.
You do not need a credit card to get a loan, but you usually need to have a credit history. Without a credit history, a financial institution cannot assess your ‘credit worthiness’, or your capacity to pay off the loan.
If you don’t have a credit card, your credit history can reflect any record of paying off an asset, such as a retail loan for goods.
Without any credit credit history, you’re limited in the type of loans you can apply for, but you may be able to obtain a secured loan against an asset by providing evidence you have stable income through a full-time and secure job, an unblemished debit card history and regular monthly saving. The loan, however, may come with higher interest rates and repayments.
Credit card debt can cripple your finances. If you’re wondering how to get rid of credit card debt, here are a few steps to get you back in the black:
Calculate your debt – Knowing the magnitude of your credit debt is important. Online credit debt calculators make it easy to determine the debt size, and repayments required.
Work out a repayment plan – Take some time to formulate a credit repayment plan. Consider increasing your income, scaling back your lifestyle or refinancing.
Talk to your credit provider – If you’re still struggling with your debt, talk to your credit provider. You may be able to come to a new arrangement.
As a rule of thumb, this tends to be around 2-3 per cent of the outstanding balance on your credit card. You can choose how much you want to repay each billing period as long as it is higher than this minimum required amount.
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.