Credit Cards
Signing up for a credit card can be a major financial decision; if you don’t do your homework it can end up costing more than it’s worth. When you’re shopping for a credit card, study the numbers. You’ll want to find out about the Interest Rate, annual fee, grace period, and more. Consider the following questions before deciding on any credit card:
- Is there an introductory rate? How long does it last? Does it apply only to purchases, balance transfers, or both?
- When the introductory rate ends, what will my long-term rate be?
- Is there an application fee or other processing fees when I sign up?
- Is there an annual fee? Is it possible to have it waived the first year?
- What kinds of penalty fees apply? Are there late fees, over-the-limit fees, or balance transfer fees?
- When and how will my variable Interest Rate be changed?
- What is the grace period before interest charges apply?
Card Selection
Two Australian credit cards with the same attractive interest rate can have vastly different fees and other costs. One card may offer rewards or perks that are appealing to you, while the other offers only credit. Think about other services you may need, such as cash advances or balance transfers. Some cards offer more favorable terms for these kinds of transactions than others. Make sure you choose a card that is worth what it costs you. You should also consider whether the credit limit is high enough, how widely the card is accepted, and the plan’s other services and features.
Be honest with yourself
What are your actual financial habits and credit needs? The way you plan to pay your bills is important when it comes to choosing a card. Carrying a balance every month, instead of paying your balance in full, can drastically change what you are shopping for. Likewise, the credit limit, rewards programs, and other cardmember benefits you apply for require thoughtful consideration. Don’t pay extra for anything you can’t use, and don’t over-extend yourself financially – it can lead to major problems later on.
Consider your credit situation
Do you have good credit? Pat yourself on the back and apply for one of the many low-interest, premium-level (platinum or gold cards), or reward/rebate cards available.
Consider your spending habits
Will you be running up large bills and carrying a balance? A low-interest card is a must-have. Will you be using your card often but paying off your bill in full each month? A rewards card can be a steal when you’re not paying interest! Do you have difficulty handling your credit responsibly? Aim for a card with a lower credit limit, which can help you learn good habits without the danger of incurring excessive debts.
Consider Consolidating your debts?
Consolidating all your debts to a low interest rate credit card, personal loan or a debt consolidation loan will give you one easy payment a month and could save you money.
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