What you should ask yourself before switching credit cards in 2022

Did 2021 change the way you use your credit card? From lockdown budgeting to Christmas spending, after such a big year, it could be time to reassess what’s in your wallet.

Take a look at your current card’s interest rate and fees, as well as the value that its rewards program is providing you. If your needs have changed in the last 12 months, you could save a heap of money by simply switching to a new credit card in the new year.

So, here are the top questions you need to ask yourself while searching for your perfect credit card in 2022.

Where do credit card rates sit right now?

Currently, the average credit card rate sits at 17.01% on the Mozo database. However, there is a massive range of rates, depending on the type of card you choose.

For example, there are 0% p.a. interest rate offer credit cards, which charge no interest for an introductory period. In contrast, there are also rewards credit cards, which come with the ability to earn redeemable points and shopping perks and generally have higher rates - an average of 19.93%.

What do I want from my new credit card?

Knowing what types of credit cards are on offer is the first step to equipping yourself with the right one. The problem is, there are so many of them! From balance transfer offers to rewards programs, it’s essential to work out what you’re hoping to get from your card, as well as how you plan to use it.

• Low rate credit card

While many credit cards charge 20% p.a. or more on purchases, low interest rate credit cards have an interest rate of >15% p.a. and can save you hundreds of dollars a year. These cards are a cheaper way to manage purchases if you tend to carry your balance from month to month. Or perhaps you simply forget to pay off your balance from time to time and want to be more budget-conscious.

• No annual fee credit card

No Annual Fee Credit Cards skip the required yearly payment that some credit cards charge. Generally, the lower the annual fee, the fewer bells and whistles. These cards suit someone who pays their balance on time and wants to save money by avoiding an annual fee.

• Balance transfer credit card

Balance transfer credit cards let you transfer your existing credit card balance to a new credit card with a low or 0% introductory interest rate so that you can clear existing debt faster. These cards can save you money on interest costs and fees.

• Rewards card

Rewards credit cards allow you to earn points as you spend, which can then be cashed in for products or perks such as free flights, upgrades, cash back or gift cards. The value and type of rewards points vary depending on the card’s earn rate and the rewards program.

What can I afford to spend each month on basic card charges and fees?

Once you’ve identified the type of card that’s right for you, you’ll want to know all about the key features it comes with. From the interest rate to the minimum payment, these are the things that every card has. The specifics vary card-to-card, but they make up the foundations of how you will spend  - and how much it could wind up costing you.

It’s important that you’re familiar with the basics when choosing a new credit card. For example, a more competitive interest rate can be the difference between a manageable balance you pay off and a mounting debt.

With that in mind, we’ve broken down the need-to-know the costs related to having a credit card that you need to be aware of before adding a new piece of plastic to your wallet.

Feel like you know what you want?  Start comparing credit card options right now below. Or, if you’re looking for more info, head over to our credit cards hub for even more guides and comparisons. Also, check out the Mozo credit card best page, for the best credit card deals in Australia this month.