4 major credit card myths busted

lady on phone with credit card

Even though many Aussies are reaching for their credit cards more than ever before, there’s still a lot of misinformation flying around.

To help you find your way between fact and fiction, we’re here to do some major myth busting for some common credit card tales.

Myth 1: It’s hard to apply for a credit card

Since a credit card is a credit product, it’s easy to get the idea that applying for a credit card will be incredibly difficult or prohibitive. Realistically, applying for a credit card is only going to be difficult if you have a track record of not paying off debt. Providers will check your credit score, but if you’ve been good about paying your dues, you should have no problem getting a credit card. 

If you are applying with your usual bank, you may even find that you are pre-approved or do not have to provide supplementary documentation. 

Myth 2: It’s impossible to get on top of credit card debt

The main word that comes up with credit card fearmongering is “debt”. Credit cards will only lead to debt, credit cards will damage your credit score, credit card debt is a trap…

When dealing with a product that involves borrowing, it’s important not to ignore the reality of debt. It is very possible to use a credit card to spend beyond your limits and end up with a growing balance of debt that feels out of control.

However, the key here is education. A lot of avoiding credit card debt - or getting out of credit card debt - is knowing which credit card to choose. Choosing a credit card with a high purchase rate (for example, a rewards credit card) when you know you’re a big spender who may not be able to make full payments each month? That’s sure to land you in debt. 

If you have an existing credit card that needs clearing, a balance transfer card will allow you to do so without adding extra interest to your debt (as long as you pay it off within the allotted time frame).

Myth 3: You can’t do anything with credit card rewards

There’s a major misconception that credit card rewards are worthless and we are here to fact check it!

When people feel that rewards points aren’t giving them anything in return, it usually means they aren’t in the right rewards scheme for them. This could mean that you want to redeem rewards in the form of Frequent Flyer miles, but you’re earning them on a card with Amplify rewards points and losing out in the conversion, for example.

You may also find that you aren’t maximising your points potential. Credit cards often run promotions involving major bonus points, so it’s definitely worth checking to see if you can scoop up some of those. You may also find that your card rewards spend at certain stores or during certain periods with perks like double or triple points.

Rewards are also set up to benefit spenders, so if you aren’t spending much on your credit card, chances are that you won’t see much coming back.

Myth 4: Big banks have the best credit card offerings

While it might be easy to apply for a credit card with your primary bank, you might be surprised to find that a lot of great deals actually come from smaller providers.

While many big banks do offer attractive options, the Mozo Experts Choice Award^ for Best Credit Card Provider has been won six years in a row by American Express. In fact, many winners of the 2022 Mozo Experts Choice Awards^ for Credit Cards were taken out by products from customer-owned banks and challengers. 

If credit cards still have you all mixed up, check out our buyers guide to choosing the right credit card. Meanwhile, stay up to date on the best credit cards in Australia.