Top reasons for a credit card

Top 10 reasons for a credit card

According to the Moneysmart debt clock, the average Australian card holder is paying over $700 interest on their credit card annually so there is good reason, if you don’t already have a credit card to avoid one.

But, there are a number of reasons why having a credit card makes a lot of sense and if you are savvy about when you use it, where you use it, and when to stop using it, a credit card can be an extremely useful financial tool.

Here’s our top 10 reasons to have a credit card.

Rewards

With a rewards credit card for every dollar you spend you’ll earn points which you can redeem for a range of things from cashback, flights or shopping rewards. The number one rule for anyone considering a rewards credit card is PAY YOUR BALANCE OFF IN FULL EACH MONTH. If you don’t, you’ll end up paying more in interest than you’ll earn in rewards value.

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  • Apply By 2 August 2021
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    Kogan Money Black Card

    Kogan Money Black Card has no annual fee and no cap or expiry date on points. It comes with a 55 interest free days on purchases and a 0% balance transfer rate for the first 12 months. Earn up to $400 in Kogan.com Credit, $50 Credit on first eligible spend in 30 days and $350 Credit when you spend $1,500 on eligible purchases in 90 days from card approval.

    Purchase rate
    Balance transfer rate
    Annual fee
    Rewards program
    20.99% p.a.
    0% p.a. for 12 months and then 21.74% p.a.
    $0
    Kogan Rewards Points
    Go to site
    Details
  • Apply By 31 October 2021
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    Bendigo Bank Low Rate Credit Card

    0% p.a. on purchases for 12 months (Reverts to 11.99% p.a). Also 0% balance transfer for 12 months. Low annual fee of $45 and no fees for additional cardholders.

    Purchase rate
    Balance transfer rate
    Annual fee
    Rewards program
    0% p.a. for 12 months then 11.99% p.a.
    0% p.a. for 12 months and then 11.99% p.a. (2.00% balance transfer fee)
    $45
    -
    Go to site
    Details
  • Apply By 30 November 2021
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    St.George Vertigo - Cashback Offer

    $300 cashback when you take out a new Vertigo Credit Card and spend $4k on eligible purchases within 120 days of the new card approval. No annual fee for the first year, $55 thereafter. New cards only, Eligibility criteria and T&Cs apply. Offer ends November 30th 2021.

    Purchase rate
    Balance transfer rate
    Annual fee
    Rewards program
    13.99% p.a.
    6.99% p.a. for 12 months and then 21.49% p.a.
    $55 $0 in the first year
    -
    Go to site
    Details
  • Apply By 30 November 2021
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    Westpac Low Rate

    Enjoy a super low rate of 13.74% with 55 days interest free plus 0% balance transfer for up to 28 months at 1% BT fee. No annual card fee for the first year, $59 thereafter. New Cards only. Offer ends November 30th 2021. T&C's and exclusions apply.

    Purchase rate
    Balance transfer rate
    Annual fee
    Rewards program
    13.74% p.a.
    0% p.a. for 28 months and then 21.49% p.a. (1.00% balance transfer fee)
    $59 $0 in the first year
    -
    Go to site
    Details

Purchase protection

Accidentally leave your brand new Ray Bans on the train or dropped your iPhone 6s and shattered the screen? No problem. Many credit cards come with complimentary purchase protection which means that if you use your credit card to purchase the goods and then they are lost or damaged (usually within 90 days from purchase) you’ll be able to claim them on your card’s insurance.

Extended warranty

Another unknown perk of many credit cards is extended warranty insurance which doubles the original manufacturer's Australian warranty up to 12 months provided you paid for the purchase of those goods with your credit card.

Never miss out on a sale

Some credit cards even have price protection insurance which means that if you buy something like a new washing machine using your credit card and find it advertised for a much cheaper price within 21 days of your purchase you can get a refund for the difference. There will be some conditions and each card will be different so be sure to check the PDS.

Building a credit history

Your credit card can be great credit building tool. By using your card for purchases and making payments by the due date you’ll build up your credit rating so that when it comes time to borrow larger amounts of money, like for a car or mortgage you’ll have a healthy credit score.

Speed through the checkout

With contactless technologies like Visa Paywave and Mastercard Paypass you can now just tap and go for purchases under $100 - you don’t even need to enter your PIN. Of course, there is a downside to that convenience if you’re prone to impulse buys so make sure your spending is budgeted for.

Worldwide shopping

A credit card opens up the shopping malls of America and the boutiques of Paris to you. Visa, Mastercard and American Express cards all have worldwide access and can be used whether you are at the shop in person or at the other end of a computer screen.

Get you out of a bind

So you’ve just paid the rent, electricity and gas bills and the car won’t start. You’ve still got two weeks til you’re next pay day and the mechanic tells you you’re up for a $500 bill. Having a credit card can be a safeguard for these types of unexpected expenses. Of course the key is to pay the money back pronto so that you can clear yourself of debt as soon as possible.

Tracking your expenses

When you pay by credit card you can track your expenses easily through your bank’s internet banking or monthly statements. You can easily see what you are spending your money on and how much you are spending so that you can budget more effectively. The paper trail is also good come tax time when you’re tallying up your claimable expenses.

Fraud protection

When you’ve got a credit card you’ll be covered for fraudulent purchases made on the card. Credit cards also reduce the need for you to carry around large amounts of cash when you’re travelling.

Tips for using your credit card the right way:

Mozo compares credit cards from a range of credit card providers including the major banks, mutual banks and credit unions. You can use our handy credit card search tool to find a card that’s right for you.

And once you’ve got that piece of new plastic, follow these tips to help you avoid the bite of credit card debt.

  • Pay the balance off in full each month. Use the card’s interest free period to your advantage by paying your balance off in full each month. Follow the link for a list of balance transfer credit cards
  • Never use your card for cash advances. While there are some credit cards that have low interest rates for cash advances, the bulk have very high rates, many over 20%. And unlike purchases where you’ll get interest free days, with cash advances you start paying interest immediately.
  • Set up automatic repayments. The best way to avoid late payment fees is to set up a direct debit from your account each month.
  • Stick to a budget. Get into the habit of budgeting and only spend up to this amount on your card each month. If you find it hard to do this, some banks allow you to put a lock on your card that will limit the spend per transaction or block particular transactions such as international purchases.

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