Credit Cards

As mentioned above, there's plenty of choice when it comes to choosing a credit card. So check out our list of card types below to decide which plastic is worthy of a spot in your wallet:

Balance transfer credit card: Have you racked up some debt on your current plastic? Then you could apply for a balance transfer credit card that allows you to roll your existing debt over to a new balance transfer card with a zero percent interest rate. However, the same principle applies as with an intro rate credit card, as the 0% balance transfer rate offer will only be available for a set period of time from 3 to 24 months depending on the card. If you still have debt to repay after this period the rate will revert back to the standard purchase rate or even the cash advance rate, which can be as high as 23% (ouch). So make sure you work out how much you will need to repay each month, using Mozo's credit card debt payments calculator, to ensure you blast the debt within the balance transfer term. Also be aware that the balance transfer rate only applies to the existing debt you transfer to the card, not to any new purchases you make using the card, and that if you have taken advantage of a BT offer to transfer debt, you won't get the advantage of any interest free days on new purchases until your balance is completely paid off. For this reason balance transfer credit cards are often best used only to pay off an existing debt, not for new spending.

Low interest rate credit card: If you're the type of person who sometimes carries a balance on your card rather than paying it off in full every month, a credit card with a low interest rate (starting from below 10% and definitely no higher than 14%) could be on your shopping list. That way, if you do have the odd big expense like a holiday or a big ticket purchase that you need a couple of months to pay off, you won't be hit with an excessive interest rate for the privilege. Low interest rate cards generally don't come with frills like rewards programs, travel insurance or other perks, but with the average credit card rate stuck above 17% they are significantly cheaper pieces of plastic. While most low interest credit cards require you to pay an annual fee, it will generally be much lower than an annual fee for a fancier platinum or rewards card, and the cost of the annual fee is likely to be far lower than paying a high interest rate on your spending each month.

Interest free credit card: If you intend to purchase some big ticket items in the near future and need some breathing space to pay them off,  you could opt for a credit card with a zero interest “honeymoon” period. Interest free credit cards usually mean you'll get a 0% interest rate on purchases for an introductory period of anywhere between 3 - 12 months, however once the intro term has come to an end the purchase interest rate will then revert to a higher rate. So if you go for an intro rate card make sure it not only has a competitive “honeymoon” rate but a low revert rate as well. That said, interest free credit cards are generally best suited to conscientious spenders who can commit to paying off their purchases before the interest free period ends and who won't be tempted by the 0% rate into buying more things than they really need.

No annual fee credit card: If you're someone who really only uses your credit card as a convenient payment method, doesn't value perks like rewards programs and diligently pays off your card balance in full each month, your credit card match could be a no annual fee credit card. You won't need to ensure the interest rate is also ultra-low, because there's no need to worry about being hit with interest when you pay your credit card bill in full and on time each month. There are some no annual fee credit cards on the market that do offer rewards programs and other perks, but for the most part these cards are no frills options suitable for those who don't want to have to pay a fee for the privilege of owning a credit card.

Rewards credit cards: Looking for a card that lets you earn rewards points on your spend? Then you're in the market for a rewards credit card. Rewards cards can either be directly linked to frequent flyer programs to let you earn Qantas Frequent Flyer, Virgin Velocity or other airline points on your spend, or they can be linked to a more general rewards program that lets you earn and redeem points for everything from gift cards to discounts on retail purchases to travel. The downside to rewards credit cards is that they generally come with higher annual fees and higher interest rates than no frills credit cards. This means you'll need to be sure that you'll earn and redeem enough rewards each year to make up for the annual fee and you'll also need to pay off your credit card balance in full each month to avoid interest charges that could negate the value of the rewards. Use Mozo's Rewards Revealer tool to find the perfect rewards card for your spend.

Platinum credit cards: Want to supersize the amount of rewards you can earn and the freebies you gain? A platinum credit card generally comes with all the perks of a standard rewards card but just more of them, as you'll typically gain bigger bonus points, more rewards points per dollar spent, exclusive entertainment offers and of course more privileges like inbuilt travel insurance, concierge and purchase protection. The catch to all this is higher interest rates and fees, so platinum cards are really suited to people who never miss a payment and always pay their balance in full each month. You'll generally need to meet some strict lending criteria to get a piece of platinum plastic in your wallet, like a minimum income amount, and in any case you'll likely need to be a big spender to be able to earn enough rewards to offset the higher annual fees that come with platinum cards.

Travel credit cards: Holidaying overseas is expensive enough with everything from flights to accommodation to factor into your budget - so don't add pricey currency conversion fees to that list! By searching Mozo's travel credit card hub for some plastic specifically designed for overseas use, you could save yourself big bucks. Let this example speak for itself: Say you went overseas with a standard credit card and spent $5,000 on the card, a currency conversion fee of 3% would set you back $150. But if you searched the travel money market for a competitive deal with no foreign exchange fee, you could keep that $150 in your pocket.

Whether you're a no frills kind of borrower or a big spender looking to rack up rewards points, you should always compare the credit card market to ensure you sign up with the best deal for you. Here are some features to look out for:

Interest free days: As the name suggests, your interest free days is the amount of time you will pay no interest on your purchases, which is usually 44 or 55 days and starts at the beginning of your statement period and ends on your credit card due date. Big catch coming up: If you fail to pay off your statement balance in full by the due date, you will no longer receive those interest free days for your next statement period. To start receiving interest free days again, you'll need to reduce your balance back down to zero first. 

The best way to ensure you never miss a credit card monthly payment is to set up a direct deposit from your bank account to your credit card provider, so you can clear your balance in full by the due date each month and continue to enjoy interest free spending during the next period.

Complimentary insurance: As mentioned above, many reward and platinum credit cards come with some great complementary features including:

• Overseas travel insurance: With inbuilt travel insurance you can save yourself the headache of searching for a good travel insurance deal and of course the cost of a standalone policy. But keep in mind that to activate the complimentary travel insurance, card providers often require you to pay part of your travel expenses on the card and have a return ticket (You can find the provider’s specific conditions in their product disclosure statement).
• Purchase protection: If you’re a big spender who makes big purchases on a regular basis, purchase protection is probably a credit card feature that you should look for. The insurance works by protecting you for a set timeframe after you have made a purchase (around 90 days) against theft, accidental damage or may even cover you if you have lost the item.
• Extended warranty: When you purchase a big ticket item, it will usually come with a warranty but did you know some rewards and platinum credit cards offer complimentary extended warranty insurance? This means that your precious goods will be covered for an extended period. Just keep in mind, to be eligible for the extended warranty, you will need to make the purchase on your credit card.
• Price protection: Retailers are constantly slashing prices, so while you may purchase an item for $1,000 you could come back just a few weeks later to find it is now just $700. That’s where price protection insurance could save you big bucks by refunding you the difference as long as you’ve used your card for the original purchase.

Card scheme: When you start looking for a credit card you will find there are three main schemes to choose from - Mastercard, Visa or American Express. But will choosing one from the other make a difference to your experience? Here's a quick comparison:

• Zero liability policy: All schemes come with protection from unauthorised transactions, so if someone has fraudulently charged purchases to your card you should be able to get your money back as long as you haven’t been careless with your card or PIN.
• “Tap and go”: You can make contactless payments for purchases under $100 with VISA Paywave, Mastercard PayPass or AMEX Contactless.
• Worldwide access: Both Mastercard and Visa have large worldwide access at over 30 million locations. While we couldn’t find a statement by AMEX confirming the exact number of worldwide locations where AMEX cards are accepted, AMEX is generally known to have less locations than Mastercard and Visa.
• Rewards points and freebies: While the card scheme doesn’t necessarily determine the rewards and features you receive - as the individual bank or card provider will decide on the offerings - standalone AMEX cards issued directly by AMEX generally have more generous rewards programs than bank branded AMEX, Mastercard and Visa cards. But we suggest if rewards points are high on your priority list the best way to decide between the three is to punch in your details into our rewards revealer.
• Surcharge fees: Whether you’re picking up the groceries from the local shops or filling up at the bowser, you probably have been charged a surcharge fee for paying with a credit card at some point. This is because the merchant has to pay a fee to their bank to access the card scheme, which the merchant then decides to pass onto you. While merchant service fees for Mastercard and Visa are generally quite similar, AMEX is known to charge higher fees to merchants, thus the merchant may pass on a higher surcharge to the customer. Luckily, new rules have come into force in Australia banning excessive surcharges on credit card transactions.

Credit cards are a great convenience, as they allow you to spend in-store, online and overseas and take advantage of features like interest free days and rewards points, but this convenience can come at a price. So watch out for these fees that could end up costing you big bucks:

Annual fee: Each year you may be charged a fee for using the credit card, which could be anywhere from $0 to $700. If you're paying a high annual fee, you should make sure it is worth your while with generous rewards points and other perks that you can make regular use of like international travel insurance. But if you're a no frills type of person who pays your credit card bill on time each month and doesn't use credit card perks like rewards, there's no reason you should be forking out money for an annual fee. Look for a no annual fee credit card instead.

Cash advance fee: Withdrawing cash on your credit card is a major money drain, as you will not only be charged the cash withdrawal fee (usually a percentage amount around 3% of what you withdraw) but will also incur a high cash advance rate that can soar over 20%. And unlike purchases, interest free periods don't apply for cash advances so you'll be charged interest from the day you make the cash advance until the day you clear your credit card balance.

Overseas currency conversion fees: If you regularly jetset overseas, a standard credit card could see your overseas travel money bills soar, as every time you spend on the card you could be hit up with a pricey currency conversion or foreign exchange fee which can be anywhere between 0%-4%. So when you're planning your next international vacay, search Mozo's travel credit card section for some plastic that has low or no foreign currency conversion fees whatsoever.

Late payment fee: When you don't pay your balance by the due date you could be hit up with a late payment fee of around $10-$30 on top of the interest charged. So as suggested above, set up automatic repayments so you never miss the due date.

Ah, the age old debate of plastic versus personal loans. The obvious benefit of a credit card is it provides you with the flexibility to pay as you please, but that flexibility can come at a cost with the standard credit card interest rate sitting at a hefty 17%. That's not a problem if you are able to pay off the card in full each month and thus avoid the interest charges, but as soon as you do rack up credit card debt it takes discipline to pay it off.

This brings us to the second problem with credit cards, which is that they don't come with an enforced repayment plan. In fact, the minimum monthly repayment on a credit card is generally around 2% - 3%, and if you only ever pay that each month it could take you decades to pay off your credit card debt!

For those who don't have the financial discipline and commitment to paying down credit card debt as fast as they can, a personal loan can be a good alternative, particularly for big ticket costs or purchases that may be impossible to repay within a 55 day interest free period. 

A personal loan allows you to borrow a lump sum and pay it back over a set time frame (typically one to seven years) at a lower interest rate of around 10%. The monthly repayments are designed to actually pay off the whole loan over that period, and some personal loans also let you make extra repayments to pay it down even faster if you can afford to.

Personal loans can also be useful tools for debt consolidation, where you consolidate multiple credit card debts into a single personal loan at a lower interest rate to save on interest and reduce the stress and headache of multiple credit card bills all requiring payment.

For more information about the difference between the two, read our full comparison of personal loans vs credit cards.

Ready to start comparing? Our credit card comparison table at the top of the page is a great way of seeing some of the best deals in the market right now and comparing on the features that are most important to you, whether that be low interest rates or 0% balance transfer offers or rewards programs. Once you've found a card offering a great deal on the feature most important to you, be sure to check the other features of the card to make sure you're not going to get stung by a huge annual fee or a hefty purchase rate.

Alternatively you can use our credit card search tool to punch in your details for a personalised search result. And if you're looking to save on interest by switching from your current card to a card with a lower rate, our Switch & Save Calculator will show you how much you could save by finding a cheaper card.

There are two main things you will usually need to apply for a credit card in Australia:

1. Identification: The bank or credit card provider will ask for details of your identification like your Australian driver's licence number. You will also need to be an Australian resident and usually over the age of 18.

2. Financial details: They'll also want to know details of your employment and how much you earn. Each provider will have their own income requirements, for example if you're applying for a basic credit card you may only need to earn a minimum of $15,000 each year, compared to a premium card that will have a higher income requirement of generally over $65,000 per annum.

Credit card providers can, and commonly do, reject applications for a number of reasons. When assessing your application, the provider will take into account a number of factors including your job stability, earnings, expenses and credit history.  Any of these areas can be grounds for rejection, as can other more basic issues such as not meeting citizenship or residency requirements, being under the minimum age limit and not earning enough to meet  the minimum income requirement for the card.

A card provider may also reject your application if you've applied for several credit cards in a short space of time, as this may indicate that you are struggling financially. To maximise your chance of being approved, don't apply for a credit card without first checking that you can meet the application requirements and don't apply for a credit card unless you seriously intend to use it.

Finally, even something as simple as entering incorrect information on your application can be grounds for rejection, as a something like an incorrectly entered drivers license number for instance can make it difficult for the card provider to verify your identity. Always read over your application before you submit it and double check that all the information you've entered is correct.

If you've been rejected for a credit card, don't make the problem any worse by immediately applying for another card. This could more than likely add another black mark on your credit record, as any credit card rejection will show up on your report.

The first thing to do is get in touch with a credit bureau to request a copy of your credit report. This will tell you if your credit rating needs improving, or if there are any mistakes on your report that could have led to your rejection. If your credit rating is less than stellar, make a plan to try and improve it. This could include consolidating outstanding loans or cards into a debt consolidation loan to help you pay off the debt faster. If you've spotted an error on your report, you can contact the credit agency to try and get it fixed. 

The other area to review is your monthly expenses. See if there are big expenses you can cut down and set a simple budget to try and reduce your everyday spending.

Once a bit of time has gone by and you've been able to fix some of the above issues, you could try applying for another credit card again. Just because you've been declined once doesn't necessarily mean you will always be declined.