Credit cards for everyday spenders
Do you use your credit card for everyday spending - like grabbing lunch, shopping for groceries or loading up your Opal card? The right piece of plastic can be a useful addition to your wallet when you’re out and about, running errands and paying for all life’s little expenses.
But it’s important to make sure you aren’t paying way too much for the convenience. Here’s how to choose the right card for your everyday spending needs:
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- American Express
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- Qantas Money
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What to look for
When you choose a credit card for everyday spending, focus on features that will keep your costs low and your spending convenient. Don’t get sucked into rewards schemes or premium offers because most of the time, you’ll just wind up paying way too much for something you rarely use.
Here are some of the most important things to look for in an everyday credit card:
The most important thing for casual spenders is to make sure you aren’t going to be hit with a huge bill thanks to interest. Ideally, you’ll never be hit with interest payments, since you can take advantage of the interest free period on your credit card, but it’s still important to compare your options and look for a low rate card - that way, if you miss a monthly payment, the damage will be as minimal as possible.
Low annual fee
Getting slugged with a high annual fee is one of the quickest ways to be saddled with plastic that’s more hindrance than help. And with so many low or no fee options out there, why would you ever pay a fee if you don’t have to?
Interest free days
Remember when we said that ideally, you’d never have to pay interest? Well that’s thanks to interest free days, which give you a chance to pay off your credit card balance before interest is applied. You’ll usually get something like 44 or 55 days.
A bunch of credit cards come with special offers attached that can help you save even more - things like a zero interest introductory period, or an annual fee waived for the first year. The important thing, if you’re chasing one of these deals, is to make sure that after the offer runs out, the interest rate or fee reverts back to something reasonable.
These days, contactless payments are par for the course - who doesn’t love the convenience of Tap ‘n’ Go? So if you’re after a quick, convenient everyday shop, make sure you pick a card that has contactless payment abilities.
Cards that are widely accepted
Your credit card will be no good for everyday shopping if half the stores you walk into don’t accept it! When you’re looking for widely accepted plastic, Visa or MasterCard credit cards are a good bet. AMEX isn’t as widely accepted, so check if your favourite shops accept it before grabbing one.
Convenient payment options
Back to paying off your balance before getting hit with interest (can you tell it’s important yet?) Don’t forget to check out what options you have for paying your credit card bill. For example, can you pay off your balance online? Is there an option to set up direct debits, so you never miss a payment? The easier it is to pay for your spending, the less likely you are to be hit with extra charges for being late.
Why use a credit card?
Plastic is super convenient, and there are plenty of good reasons why one might be an important part of your everyday spending arsenal. Here are some of the main reasons you might consider using a credit card as an everyday spender:
- Buy now, pay later - this is the big reason many people have credit cards: you get to spend before the money is even in your account. But remember, a credit card shouldn’t be a replacement for good money management. If you’re routinely using your plastic to buy essentials until your paycheck hits the bank, it might be time to re-evaluate your budget.
- Don’t have to carry cash - for some people this is all about convenience, for others, it’s safety. Have you ever felt nervous carrying around a large amount of cash in your wallet? Well, grab an everyday credit card, and that problem is solved.
- Security systems - speaking of safety, systems like Visa and MasterCard come with their own security measures, including a zero liability policy. So even if you’re the victim of fraud, chances are you won’t be footing the bill.
- Build a credit history - if you’re ever planning to borrow money - say for a home loan - then you’ll need to be able to prove that you can responsibly handle borrowing someone else’s money by building up a good credit history. One way to do this, is spending on a credit card and paying off your balance faithfully.
- Track your expenses - if you do all or most of your spending on the same card, it can make it really easy to keep track of where and what you’re spending. You can even use your credit card statements to help you plan a budget.
Credit card pitfalls for everyday spenders to avoid
Although there are heaps of good reasons to use a credit card for your spending, there are a few pitfalls everyday spenders need to keep an eye on. Here are some of the big ones and how to avoid them:
Carrying a balance: The number one credit card sin is allowing a balance to roll over into the next month. When you do this, you’ll be hit with interest, and thanks to the relatively high rates on credit cards, if you wait just a few months before paying your outstanding balance, you can wind up owing way more than you bargained for.
Solve it by: Try setting up direct debits so you never miss a payment. You can set the automatic payment to cover just the minimum payment amount, the entire balance, or a fixed amount (for example, you might set it up to pay $500 each month.) Remember: it’s always a good idea to pay off as much of your balance as you can, rather than just the minimum amount.
Using your card to get cash: If you tend to hit up the ATM with your credit card in hand, you'll not only be hit with a cash advance fee when you withdraw, but you’ll also pay the steep cash advance rate until you pay off the balance. Not to mention, on many credit cards, cash advances aren’t subject to interest free days, which means you’ll be paying high interest as soon as you have the cash in hand.
Solve it by: If getting cash out at the ATM is unavoidable, try using your debit card instead. You won’t pay interest, and if you use your bank’s ATM, you likely won’t even pay an ATM fee.
Using a credit card when you’re already carrying debt: This one’s tricky, because it’s hard to avoid when you don’t have the money available in your account for necessary items. But building further debt by routinely using your credit card to buy everyday items won’t help.
Solve it by: Getting proactive! Check out a balance transfer card and blast that debt away. Once you have moved your debt across, set up a repayment plan which will see you clear that debt within the balance transfer period. Avoid making any new purchases with the card since you'll be charged the purchase rate and not the low balance transfer rate. While you're paying off your debt, stick to using your debit card, as this will mean you're using your own money not the banks.
Getting sucked into overspending: Whether you’re running after rewards points or just enjoying the freedom of spending more than you have in the bank, letting your spending get away from you can be disastrous.
Solve it by: Have a budget and set yourself a spending limit, whether that means a daily, weekly, or monthly amount. The tricky part is sticking to it, so remind yourself why you got this credit card in the first place - for everyday spending, not big blowouts.
Is it worth chasing after rewards?
The thing is, Mozo has found that unless you’re spending up big, rewards cards generally don’t offer great value. So for everyday spending, you’re usually better off focusing on keeping interest and fees low, rather than chasing mediocre rewards.
But if you are into rewards, there are a couple of things you can do to maximise their value to you:
Credit card alternatives for everyday users
If you’ve got the money available in your account anyway, and you’re just using your credit card through habit - or you find yourself mis-using it - it might be time to consider other payment options. Here are a couple:
- Debit card - offers the convenience of plastic without the risk of debt, since you’re spending your own money. Check out our guide for a full rundown of debit cards vs credit cards, or check out the debit cards on offer in our comparison table.
- Cash - old school cash is your other option. It can also help to prioritise your spending or set a budget, because spending cold hard cash leaves more of an impact on your mind than tapping your plastic.
Ready to find an everyday credit card?
Now that you’re armed with all this knowledge, head over to our credit card comparison page to find the right piece of plastic for you.
Or if you want to read more about finding the right card, or how to keep your balance under control, or any other topic, find it in our credit card guides.
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