What you should ask yourself before switching credit cards in 2022

close up on hands opening a new credit card with an activation letter

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.

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 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 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 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.

Interest or purchase rateThe purchase rate, sometimes just referred to as the interest rate, is how much interest you’ll pay when you buy something with your credit card and don’t pay it off within the interest free period. According to the Mozo database, purchase rates can range from just 7.49% p.a. up to 24.99% p.a.
Introductory interest rate offerAn introductory interest rate is a low interest rate (usually 0% p.a.) that lasts for a limited time initially after opening your credit card. Within the Mozo database, there are offers available between 6 and 25 months. Once the offer expires, the rate reverts to a higher one.
Minimum repaymentYour minimum repayment is the minimum amount you need to pay off your credit card balance each month to avoid a late fee. It’s often the highest of either a flat amount ranging from $5 to $100 or a percentage of your balance, usually somewhere between 2% and 10%.
Annual feeMost cards, but particularly high end or rewards options, come with an annual fee attached. According to the Mozo database, these often range from as little as $0-$40 on budget-friendly options, right up to a massive $1400 for the most expensive premium credit card. The annual fee is designed to cover the cost of the perks on offer with that card. So, generally speaking, the more perks freebies you can claim with a credit card, the higher the annual fee is likely to be.
Interest-free daysWhen you purchase your credit card, you’ll usually have up to 44 or 55 interest free days in which you can pay off your balance and not be charged interest
Balance transfer rateDealing with debt from existing credit cards? You might seek some relief by taking advantage of a balance transfer offer this year. The balance transfer rate is the interest rate you’ll pay on your new card on the balance you transfer from an old card. It’s usually much lower than the normal purchase rate, often 0%, and lasts for a limited time.
Cash advance rateWhen you withdraw cash with your credit card, you’ll incur a high cash advance rate. According to the Mozo database, these charges are usually a minimum of 20% but can be as low as 8.05% and as high as 25.99%. You’ll be charged interest from the day you make the cash advance, as interest free periods don’t apply to withdrawals.
Foreign exchange marginSometimes also called the currency conversion fee, the foreign exchange margin is an extra fee you’ll pay your credit card provider if you shop abroad or buy something in a currency other than Aussie dollars, for example, while online shopping at a US website. This fee varies between 0% and 3.65% in the Mozo database.
Other fees- late repayment fees
- fees if you go over your credit limit

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.

Compare top credit cards - last updated 21 May 2022

Search promoted credit cards below or do a full Mozo database search. Advertiser disclosure
  • Apply By 31 Jul 2022
    Bendigo Bank Low Rate Credit Card

    0% p.a. on purchases and 0% p.a. on balance transfers for up to 20 months from account opening (Reverts to 11.99% p.a). A balance transfer fee of 2% applies to the balance transferred. Low annual fee of $45.

    Purchase rate
    0% p.a. for 20 months then 11.99% p.a.
    Balance transfer rate
    0% p.a. for 20 months and then 11.99% p.a. (2.00% balance transfer fee)
    Annual fee
    $45
    Rewards program
    -
    Details
  • Apply By 30 Jun 2022
    Westpac Low Rate - Cashback Offer

    Enjoy a super low rate of 13.74% with 55 days interest free plus up to $400 cashback - $100 cashback for each month you spend $1,000 or more on eligible purchases in the first 4 months from card approval. New Cards only. T&C's and exclusions apply.

    Purchase rate
    13.74% p.a.
    Balance transfer rate
    6.99% p.a. for 12 months and then 21.49% p.a. (1.00% balance transfer fee)
    Annual fee
    $59
    Rewards program
    -
    Details
  • Apply By 30 Jun 2022
    St.George Vertigo - Balance Transfer Offer

    0% p.a. for 32 months on balance transfers requested at card application. 0% balance transfer fee applies. Rate then switches to applicable variable cash advance rate. No annual fee for the first year, $55 thereafter. New cards only, Eligibility criteria and T&Cs apply.

    Purchase rate
    13.99% p.a.
    Balance transfer rate
    0% p.a. for 32 months and then 21.49% p.a.
    Annual fee
    $55 $0 in the first year
    Rewards program
    -
    Details
  • NAB Low Rate Card

    0% p.a. interest on balance transfers for the first 32 months, plus a low ongoing purchase rate after that means you can spend with confidence. There's also up to 55 interest free days on purchases to help you manage your budget better.

    Purchase rate
    12.99% p.a.
    Balance transfer rate
    0% p.a. for 32 months and then 21.74% p.a. (0% balance transfer fee)
    Annual fee
    $59 $0 in the first year
    Rewards program
    -
    Details
  • Apply By 30 Jun 2022
    Bank of Melbourne Vertigo - Balance Transfer Offer

    0% p.a. for 32 months on balance transfers requested at card application. 0% balance transfer fee applies. Rate then switches to applicable variable cash advance rate. No annual fee for the first year, $55 thereafter. New cards only, Eligibility criteria and T&Cs apply.

    Purchase rate
    13.99% p.a.
    Balance transfer rate
    0% p.a. for 32 months and then 21.49% p.a.
    Annual fee
    $55 $0 in the first year
    Rewards program
    -
    Details

^See information about the Mozo Experts Choice Credit Card Awards

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