Your first credit card 101: What you need to know

By Ceyda Erem ·

In life you’re likely to experience a lot of ‘firsts’, like your first car, apartment, or holiday overseas. But one thing you might not give much thought to is the first time you apply for a credit card. 

Whether you’ve decided to take out a credit card for emergencies or to start your credit history, there are a few things you need to know before submitting an application. That’s why we created this short guide to help you find the right card.

Opt for a low rate credit card

If you are looking to only use the card for everyday spending, you might want to consider a low rate credit card. Interest rates on these types of cards can start from as low as 7%, making your repayments easy to manage. And with a low rate card, carrying a balance won’t typically break the bank. 

You can check out some of the latest low rate card offers by heading over to our credit card comparison tool.

Don’t get tied up in fees

When you begin your search for your first credit card, it’s worth considering whether the card has an annual fee. While low rate cards generally don’t have hefty annual fees, it is possible to find a card without any. In fact, there are currently 16 credit cards with an interest rate below 15% in the Mozo database that don’t have an annual fee.

Another cost to look out for are foreign exchange fees. This is charged when you make a purchase on an international website or spend with the card overseas, and is typically around the 3% mark. Again, it is possible to find a card that doesn’t come with this fee, you just have to do your research.

Keep an eye on late payment fees as well, which as the name suggests, are charged if you miss a repayment. But aside from getting stung with a pesky charge, frequently missing credit card repayments is a big no-no for more than one reason, which brings us to our next point.

Keep a healthy credit rating

A lot of Aussies choose to take out credit cards in order to build a healthy credit history, which lenders will see when they apply for any future products, such as a home loan. However, bad habits, like missing repayments, could leave a mark on your credit history. This, in turn, could be problematic for a lender assessing a loan application. So you’ll need to make sure you always make your repayments by their due date and either pay your balance off in full or pay more than the minimum amount. 

It’s also a good idea to only apply for one credit card at a time, instead of submitting multiple applications, as this also appears on your credit history. And if in the event you are rejected, find out why by accessing your credit report and mending the damage before reapplying.

Understand how interest-free days work

One standard feature most credit cards tend to have are interest-free days. And if you learn how to use them to your advantage, you might never have to pay interest! Interest-free days refers to a set number of days (typically between 44 or 55 days) where any new purchases will not incur any interest. 

Your interest-free days start at the beginning of your statement period and so long as you continue to pay your balance off in full by the due date, the same number of interest-free days will continue. Just keep in mind though that the amount of interest-free days you have left depends on when a purchase is made. 

For example, if you have 44 interest-free days and you make a purchase on the first day of your statement period, you’ll have the maximum number of interest-free days to pay it off without incurring interest. On the other hand, if you were to purchase something halfway through your statement period, you’d only have half the amount of time to pay it off. 

Want more information about how interest-free days actually work? Check out our handy guide!

Be realistic about your credit limit

During your application you might be asked about what credit limit you’d like on the card, which refers to the maximum credit amount you have access to. To keep it easy to manage, you might want to opt for a credit limit between $5,000 and $7,000. By keeping your credit limit to a minimum, you won’t be tempted to overspend or find it easier to stay on top of your balance. 

While you are able to increase your credit limit down the track, keep in mind that future lenders will see this and could view it as a liability if you ever decide to take out a home loan. 

Ready to start your search for your first low rate credit card? Head on over to our credit card comparison tool, or get started with some offers below.

Compare low rate credit cards - page last updated September 26, 2020

Search promoted credit cards below or do a full Mozo database search. Advertiser disclosure.

  • Thumbnail icon for CUA
    CUA Low Rate Credit Card

    11.99% p.a.

    0% p.a. for 13 months and then 21.74% p.a.

    $49 $0 in the first year

  • Thumbnail icon for St.George
    St.George Vertigo

    0% p.a. for 7 months then 13.99% p.a.

    0% p.a. for 22 months and then 21.49% p.a. (1.50% balance transfer fee)

    $55 $0 in the first year

  • Hot Deal$200 Cashback Offer (T&Cs apply)

    Thumbnail icon for Westpac
    Westpac Low Rate

    13.74% p.a.

    0% p.a. for 20 months and then 21.49% p.a. (1.00% balance transfer fee)


  • Thumbnail icon for NAB
    NAB StraightUp Card

    $10/month - $1,000 Credit Limit

    0% p.a.

    No current offer

    $120 $10/month - waived if no spend & no balance owing


^See information about the Mozo Experts Choice Credit Cards Awards

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Ceyda Erem
Ceyda Erem
Money writer

Ceyda Erem is Mozo’s authority on Energy, as well as having broader expertise as a personal finance writer. She loves to put her researching and writing talents into stories that help our readers to make more informed financial choices, whether that’s about finding the best energy deal or writing about the latest sneaky bank tricks. Ceyda has a Bachelor of Arts (major in writing) from Macquarie University.