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Credit card buyers guide: fees, features and how to choose the right card for you

happy woman with phone online shopping and choosing one of australia's top credit cards

In this modern era, we seem to be moving faster towards a cashless society so it’s more important than ever to have a reliable credit card in your pocket. With so many credit cards to choose from, how can you ensure you’re making the right choice for you? And how can you untangle all of the confusing jargon around credit card choices?

Buckle up and settle in - it’s going to be a real ride!

A comprehensive Reserve Bank of Australia (RBA) snapshot of payment methods showed that in 2019, cards (both credit and debit cards) were used for 63% of payments, trending upwards. Cash was only used for 27% of payments in Australia, and the downward trend was sped up by 2019-2020 notices from the Department of Health that card and digital payments are more sanitary than cash. A final 13% of payments were conducted online, which will also have grown with the popularity of online shopping.

With card usage continuing to grow, we’re all about giving you the knowledge and tools to make informed credit card choices.

Every year, Mozo holds the Mozo Experts Choice Awards for Credit Cards^, and highlights the best credit cards in our database. In the most recent awards, our experts analysed more than 220 person credit cards from 75 Australian credit card providers to find the top performers.

“What the research and analysis for these awards really showed is that there’s a card out there for every spender - but to find the right card, you need to sift through a heap of options,” says Mozo Data Services Director and Experts judge, AJ Duncanson.

“Hopefully, looking at award-winning cards that perform in their given category will make it a lot easier for Aussies to find the right fit for their wallet.”

Along with awarding standout performers, we’ll also be breaking down the fees and features that set different credit cards apart. The last thing you want is confusion in the credit card process, and we’re here to help clear that up.

Before we start delving into the ins and outs of credit cards, there are some key notes to keep in mind.

Key Points:

  • Credit cards can be a helpful tool but can also have serious ramifications with regards to debt and your credit score.
  • Different types of credit cards suit different kinds of spenders.
  • Keeping your balance under control is important, and there are strategies to help: utilising interest free days, regularly checking your credit card offers, and paying more than the minimum repayment are all useful tools.

Take a look at some of the credit cards in our database, and we’ll get into the information that will keep you on top of things.

Start comparing credit cards - last updated 22 April 2024

Search promoted credit cards below or do a full Mozo database search. Advertiser disclosure
  • Apply By 28 May 2024
    American Express Qantas Ultimate Card

    Receive 60,000 Bonus Qantas Rewards Points when you apply online by 28 May 2024, are approved, and spend $3,000 on your new Card within the first 3 months. T&Cs apply. Available for New American Express Card Members only.

    Purchase rate
    23.99% p.a.
    Balance transfer rate
    No current offer
    Annual fee
    $450
    Rewards program
    Qantas Frequent Flyer
    Compare
    Details
  • American Express Platinum Edge Credit Card

    Enjoy $0 Annual Card Fee (usually $195) in the first year when you apply online and are approved. T&Cs apply. New Card Members only. Offer subject to change without notice.

    Purchase rate
    23.99% p.a.
    Balance transfer rate
    No current offer
    Annual fee
    $195 $0 in the first year
    Rewards program
    Membership Rewards
    Compare
    Details
  • American Express Explorer® Credit Card

    Receive 50,000 bonus membership rewards points when you apply online, are approved, and spend $4,000 on eligible purchases on your new card within the first 3 months (T&Cs apply). New Card Members only. Complimentary domestic & international Travel Insurance (T&Cs apply). Up to 55 days interest free on purchases. $395 annual fee.

    Purchase rate
    23.99% p.a.
    Balance transfer rate
    No current offer
    Annual fee
    $395
    Rewards program
    Membership Rewards
    Compare
    Details
  • Apply By 15 May 2024
    American Express Velocity Platinum Card

    Earn 100,000 bonus Velocity Points when you apply online by 15 May 2024, are approved, and spend $3,000 on eligible purchases on your new American Express Velocity Platinum Card within the first 3 months. T&Cs apply. Available to new American Express Card Members only.

    Purchase rate
    23.99% p.a.
    Balance transfer rate
    No current offer
    Annual fee
    $375
    Rewards program
    Velocity Frequent Flyer
    Compare
    Details
  • NAB Low Rate Card - Balance Transfer Offer

    Spend with confidence with a low 13.49% p.a. variable purchase rate and 0% p.a. interest on balance transfers for the first 28 months (T&Cs apply). 2% balance transfer fee applies. There’s also up to 55 interest free days on purchases to help you manage your budget better when you make minimum repayments. Minimum credit limit $1,000. No annual fee for the first year (usually $59).

    Purchase rate
    13.49% p.a.
    Balance transfer rate
    0% p.a. for 28 months and then 21.74% p.a. (2.00% balance transfer fee)
    Annual fee
    $59 $0 in the first year
    Rewards program
    -
    Compare
    Details

Key points

  • Different spenders will benefit from different types of credit cards suited to their spending style and budget
  • A credit card can help or hinder your efforts to establish a good credit history, depending on how you manage it
  • Paying off your balance in full, utilising your interest free days and reviewing your credit card offer regularly are just some of the strategies you can use to keep your credit card balance under control

Types of credit cards

Knowing which kinds of credit cards are available is the first step to choosing the right credit card for you. The kicker? There are so many different kinds of credit cards! To help you break it down, here’s a seriously brief rundown of each type of card. 

For more information on any of them, click through to read more.

Low rate credit card

  • What is it? A low rate credit card is a card whose purchase rate generally sits below 14% p.a. (we have options in our database starting from as low as 7.49% p.a.). With the current average interest rate for a credit card sitting at 17.12%, it’s a significant difference!
  • Who is it good for? These credit cards are good options if you often have a balance left on your card at the end of the month, as it can stop your balance-owing from spiralling out of control.
  • What’s the catch? Most of these cards will have an annual fee worth noting. If you pay off your balance every month and don’t often pay interest, you may get more out of an option that minimises fees.

No fee or low fee credit card

  • What is it? A no annual fee credit card is exactly what it sounds like - it doesn’t have an annual fee attached. In the same vein, a low fee credit card has a much lower annual fee attached than other similar cards.
  • Who is it good for? Usually pay off your credit card in full and want to keep costs to a minimum? If you don’t normally end up paying interest, you can keep costs low by opting for a card with minimal fees attached.
  • What’s the catch? Some of these cards can have higher purchase rates attached if you don’t pay off the balance in full each month.

Balance transfer credit card

  • Who is it good for? If you’re trying to bring down some existing credit card debt, this can be an effective way to do it without attracting extra interest.
  • What’s the catch? These cards are not for spenders, as adding to your balance tends to negate the low balance transfer offer. You also have to make sure you pay off your balance in the time frame allotted by the balance transfer offer - that means if you’ve got 12 months at 0% interest, any amount left owing afterwards will be charged at a much higher rate. Make sure you look into that first, if you think you might not pay things off in time!

Rewards credit card

  • What is it? Fairly self-explanatory, a rewards credit card is an option for those who don’t mind paying a little more to get a little something extra. 
  • Who is it good for? If you like perks, you’ll like rewards cards! These credit cards tend to be a good choice for big spenders, since dollars spent tend to equal rewards.
  • What’s the catch? Rewards credit cards tend to have significantly higher annual fees and purchase rates attached, so make sure you can afford to pay these cards off before you sign up for them.

Frequent flyer card

  • What is it? If you’re a big traveller, you might be interested in a frequent flyer credit card. A subset of rewards cards, these are tailored specifically to travellers and may be partnered with a specific airline.
  • Who is it good for? If you’re a big traveller, these cards are bound to appeal. Pick a card that is partnered with an airline you favour to maximise on benefits.
  • What’s the catch? Like other rewards cards, these can have high purchase rates and annual fees attached.

You may also encounter variations on these, like interest-free credit cards (which might charge a monthly fee instead of adding interest to your balance) or premium rewards cards (which are the next step up in spending over rewards cards), but the majority will fall into well-established categories.

Credit cards: the basics

Once you’ve worked out which type of card is right for you, you’ll want to know all about its key features. These are the things that every card has, making up the foundations of how you will spend your money - and how much it could cost you.

We’ve broken down the need-to-know aspects of a credit card into a handy little breakdown of terms you might stumble across.

Purchase Rate

Sometimes you’ll see the purchase rate referred to as the interest rate, but what this is the amount charged on top of your balance when you don’t pay it off within the interest-free period. The current average purchase rate in the Mozo database is 17.12%, but these range from 7.49% p.a. to 24.50% p.a. at the time of writing (excluding 0% interest cards). 

Annual Fee

This is the cost of holding a card per year. The current average annual card fee in the Mozo database is $136, but annual fees on personal credit cards range from $29 to an eye-watering $1,200 - not to mention many cards which don’t have an annual fee. Many cards also offer to waive the annual fee for the first year or another promotional period. The higher the annual fee, the more likely you are to find perks and rewards.

Interest Free Days

A credit card will generally have between 44 and 55 days where purchases do not accrue interest (though some cards offer up to 110 days interest-free!), as long as you pay off the purchase within that time frame. These can get a little bit confusing, so we’ll explain them more in-depth when we talk about credit card interest.

Minimum Repayment

A minimum repayment is the minimum amount you will be required to pay on your credit card bill each month to avoid a late fee. Note that paying this amount will NOT keep your balance from attracting interest. The minimum repayment will generally be either a flat fee or a percentage of your balance owing.

Balance Transfer Rate

The balance transfer rate is the interest rate you’ll pay on the balance you transfer from another credit card to your new one - it’s usually much lower than the purchase rate, and can often be 0% for an extended period. 

Balance Transfer Fee

Easy to mix up with the balance transfer rate, the balance transfer fee is a one off cost to bring your credit card balance over to a new card. Many balance transfer cards will skip these together, while others will have a fee that is a small percentage of your total balance (usually 1%-3%).

Cash Advance Rate

The cash advance rate is the interest charged on cash withdrawn from your credit card, which is often charged at a significantly higher rate than the purchase rate on your card. You do not get interest-free days on cash, whether it's withdrawn from an ATM or transferred into another account, and the rate is often around 21% p.a.

Cash Advance Fee

A cash advance fee is a cost you pay to access a cash withdrawal from your credit card. This is usually a percentage of the amount you withdraw, and can add up quickly.

Foreign Exchange Margin

Also called the currency conversion fee, the foreign exchange margin is an extra fee you’ll pay your credit card provider if you buy something in a different currency. Cards optimised for travel may skip this fee.

Credit Limit

A credit limit is the maximum amount of money you can borrow on your card. This will range broadly based on the card in question (premium and platinum credit cards tend to have much higher credit limits) as well as on factors like your annual income and credit history.

Complimentary Insurances

Many credit cards also offer one or more complimentary insurances. These can include:

  • Extended warranty - adding an extra warranty to that of the retailers on goods purchased with the credit card.
  • Purchase protection - protects you against loss, theft or accidental damage on your credit card buys.
  • Price guarantee or price protection - if you buy something on your card and then find it cheaper elsewhere, you may be able to have the difference refunded to you.
  • Interstate flight insurance - this is less common, but certain cards may cover you for things like delays, cancellation, luggage or rental vehicle excess for short trips within Australia.
  • Transport accident insurance - when travelling on a licensed plane, bus, train or ferry, this will cover you for serious injury if there’s an accident.

All insurances will have terms and conditions attached, so make sure to read them carefully!

Security Measures

Every credit card has some level of security put in place to help keep you safe while spending. Both Visa and Mastercard have their own fraud detection systems, plus zero liability protection, which means if you’re the victim of credit card fraud, you usually won’t be held accountable for that spending, as long as you do all you can to minimise the risk and report any problems as soon as possible.

How to use your credit card...

...for interest free spending

While credit cards have a bad reputation for hitting customers with high interest rates and out-of-control debt, it’s actually entirely possible to spend on a credit card without attracting any interest. It’s all about learning the tools and the timelines attached to your credit card, letting you spend smartly.

It’s important to understand how your credit card’s interest free days work to manage interest free spending. If your credit card has 44 interest-free days:

  • These start at the beginning of your statement period, not at the time you make your purchase. If you purchase something on the 5th of the month and your statement period begins on the 1st, you’ll have 39 interest free days remaining.
  • Cash advances and transfers do not have an interest free period.
  • If you don’t pay your full credit card balance for a statement period, you’ll forfeit your interest free days for the next month.

Here's an example of how these work:

...for overseas spending

Whether you enjoy a spot of overseas travel, or simply like to expand your online shopping horizons, it’s not uncommon to want a card that can cross currency borders. There are some things to watch out for if you’re planning on doing much travel, real or virtual.

  • Foreign exchange margin and fee - a card with a high foreign exchange margin or fee may end up costing you considerably, as extra charges will apply every time you pay in a foreign currency
  • Travel insurance - if you’re going to be abroad, you may benefit from a card that includes complimentary travel insurances
  • Frequent flyer points - if you travel a lot with a specific airline, this could be a critical feature to keep in mind to help get you deals and upgrades.

If you think a travel credit card may not be what you’re looking for, you could also consider alternatives like a prepaid travel money card.

...for freebies and perks

If you’re going to be spending anyway, you may as well be getting a little something extra in return. However, it’s important to consider that for many, the price of the card may not be worth the rewards earned.

“When choosing a rewards card, it’s vital to take into account the cost of the annual fee, because it can put a serious dent in the value of the card. In fact, in some cases, the annual fee not only cancels out the value of rewards points, it actually means you’re losing money by keeping the card,” Duncanson said.

When it comes to points, 1 reward point for every $1 you spend is a pretty standard earn rate. It’s also a good idea to keep an eye on bonus point offers - which are usually available when you sign up - and special earn rates. For example, some cards offer double or even triple points when shopping at certain retailers or during certain times. Make sure to read the fine print and get the most out of your spending.

Also watch out for caps on points and points expiry. Some cards may only let you earn up to a certain amount of points in a statement period or may only let you keep your points balance for a certain period of time. Others may reduce your points earn rate after you’ve hit a level of points.

Use our Rewards Revealer tool to help compare rewards credit cards and find the right option for you.

...for clearing existing credit card debt

While many people may see credit cards as a tool that can only bring debt, they can actually be used to help you get on top of existing credit card debt. This is where balance transfer offers and dedicated balance transfer credit cards come into play.

With many balance transfer cards offering 0% interest on the balance you transfer over, this is a way to pay down existing debt without adding additional interest. The key thing to remember is that many of these offers have a set term for their 0% interest, and the revert rate afterwards can be significantly higher, with most hovering around 21%. 

If you work out that you can pay off your debt within the allotted 0% period, you’ll be sitting pretty. Use our credit card debt repayments calculator to work out how long it will take you to pay off your current debt.

Make sure to set up automatic payments to ensure you clear any debt balance, and don’t make any new purchases on your credit card while you’re paying off a balance transfer. This will invalidate the offer and start attracting interest.

How does a credit card impact your credit score?

Like any credit product, a credit card can have a significant impact on your credit score. This can be both a good thing and a bad thing! For instance, if you have a limited credit history, you can use timely credit card repayments to build it up. 

However, not making credit card payments can have the opposite impact on your credit score and leave a lasting tarnish on your credit history. There are a few major factors that come into play in impacting your credit score:

  • Payment history - When reviewing your credit history, it will be evident how timely you were with making your payments and whether or not you made them in full.
  • Length of credit history - Future lenders will be able to see the length of your credit history - a shorter borrowing history may appear riskier to lenders.
  • Utilisation - Remember that credit limit? It makes a difference to your credit history whether you made small dips into your credit card or whether you spent the whole time maxing out your card. For instance, buying an $80 dress on a credit card with a $1000 credit limit would be 8% utilisation. Generally speaking, keeping your credit card utilised at below 30% is considered optimal.

How do I apply for a credit card?

Applying for a credit card will be a slightly different process depending on the credit card you choose to go with. 

If you choose to go with a credit card from your pre-existing banking provider, you may find the application is extremely quick and you may even be pre-approved. Otherwise, most cards will allow you to apply online, in a branch, or even over the phone (increasing numbers may be online only).

To apply for a credit card you will want to have a few things handy, just in case. These include:

  • ID - You may require a certain number of ID points to apply for a credit card. Usually a combination of licence or passport and medicare card will suffice, but check requirements in advance.
  • Proof of income - since you will be required to make payments on this credit card, the provider will need proof of income to establish your ability to make payments. Usually, this means two months of payslips. This is especially important for credit cards with a minimum income requirement. There are alternatives if you are unemployed
  • Details of current finances - these are required to assure a provider that you are not in any major financial strife that might prevent you from making repayments.

If you come in prepared, the application process can take minutes, and a new card can be with you in a matter of days.

Tips for managing your credit card responsibly

We’ve covered a lot of credit card ground, but when it comes to successful long-term credit card use, it’s all about staying sensible and using your card responsibly.

  • Don’t spend money that you don’t have - Always think of your credit card as borrowed money. If you can’t afford to pay it back, you can’t afford it and it will end up costing you more in the long run.
  • Pay your bill in full and on time - Save yourself on unnecessary fees and an interest buildup by always paying off your balance on time, and not leaving any on your card to attract interest.
  • Review your card regularly - If you’ve been with the same credit card provider for a while, you might have missed some great new providers to the market - or some hot new offers that are sure to entice. Reviewing your card to get the right option for you can save you on interest, annual fees, or just get you earning better rewards.

Still thirsty for more credit card intel? Learn more as we bust some credit card myths, or find out why Aussies can’t get enough of mobile payment options. Find Mozo’s picks for Australia’s best credit cards.

Kelly Emmerton
Kelly Emmerton
Money editor

^See information about the Mozo Experts Choice Credit Card Awards

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