Different credit cards will suit different spenders, so it’s crucial that you compare a range of options if you’re in the market for a credit card. Here are key factors to consider when shopping around for your best credit card:
How do you plan on using your credit card? For example, is it for everyday shopping or major purchases only, buying overseas or travel, or transferring an existing balance? You may need access to credit for work and be better off comparing business credit cards. Identify your card purpose so you can easily compare apples with apples.
Credit cards can charge different rates for purchases, cash advances (withdrawing cash with your credit card) and balance transfers. Also, keep an eye out for introductory, promotional, or “honeymoon” rates that revert to a higher rate after a set period (typically the first year). Knowing what rates you may be charged before applying can keep you from accruing debt.
If having a low interest rate is a priority for you, keep in mind that you can sort your results on the comparison table on this page to show you the lowest interest rate products first. Strict eligibiliy criteria will apply, but this is one way you can quickly find and compare the lowest-rate credit cards on the RateCity database.
Card fees and charges
Some credit cards charge a range of fees to cardholders. Consider whether the credit card’s benefits would likely be worth these costs. Some of the most common fees include:
- Annual fee – Annual fees can range from $0 to $1200 depending on the credit card status tier and the card issuer. Make sure to weigh up whether the benefits and other perks of the card are worth the cost.
- Cash advance fee – When you withdraw money at an ATM, you might have to pay a fee and a higher interest rate on that transaction amount.
- Late payment fee – If you don’t make your minimum repayment on time each month, you may be charged a late payment fee.
- Overseas fees – There are a number of fees associated with overseas spending, such as currency conversion fees, foreign transaction fees and foreign ATM charges.
Some cards offer a low interest rate or interest-free period for a specified time frame after you sign up. Keep in mind that the interest rate can rise steeply after the introductory period expires.
The number of days allocated to pay your credit card balance before you’re charged the purchase rate. The higher the number of days, the more breathing room to make repayments. A typical interest-free period is around 44-55 days.
Rewards programs and frequent flyer programs
Rewards card programs let you earn points on your everyday spending that can be exchanged for goods, transferred into frequent flyer points, or may come in the form of cashback deals. You’ll want to carefully compare the types of rewards on offer by the card issuer to ensure it meets your specific needs and goals.
The most common rewards associated with credit cards include:
- Travel rewards – Frequent flyer points to put towards flight upgrades, airport lounge access, travel insurance, accommodation, etc.
- Merchandise – Rewards points to put towards items such as electronics, appliances and event tickets.
- Cashback – Points you can redeem for cash, usually credited back to your account.
- Gift cards – Department store vouchers, fuel vouchers etc.
- Events – Exclusive access to pre-sale tickets, discounted tickets, VIP event access, etc.
Some credit cards also offer extras like not charging a fee for supplementary cards for additional cardholders. These programs and extras typically incur higher annual fees.
Credit card status tier
There are different credit card tiers that customers may gain approval for, ranging from the more basic options with smaller credit limits, through to platinum credit cards for bigger spenders, and even black credit cards for rockstars and royalty. The status of a credit card may be listed as a colour, such as a gold credit card, or it could be branded with a name from the issuer.
Generally speaking, these are the different credit card status tiers, which may suit different types of spenders:
- Basic low rate and low fee credit cards: Your standard entry-level offering which typically comes with a lower interest rate, more accessible eligibility criteria and lower credit card limits. This may be ideal for a first credit card.
- Mid-tier credit cards: While the credit card may still come with a competitive purchase rate, the perks and the fees may start to kick up. You may be able to earn rewards points and gain access to complimentary travel insurance, but your annual fee may be around $100-200+.
- Premium credit cards: Platinum credit cards that offer a range of perks and benefits, from rewards programs, to frequent flyer bonuses and concierge services. Applicants typically have higher incomes and are offered higher credit limits, and may need to meet spending minimums each year. These cards typically come with much higher annual fees, but it is expected that applicants can afford these.
Credit card type
There are three main credit card types: Visa, Mastercard and American Express. Visa and MasterCard are quite similar in that they are just payment processing systems, so they cannot issue cards directly to customers. Whereas Amex is both a payment processing system and can issue its own cards. When making payments, Visa and MasterCard typically carry lower card fees than Amex.