Credit Card FAQs

Answers when you need them

Have a question about balance transfers, credit card fees, or changing interest rates? Whatever your query, Sergei has an answer.

That's right; we're not just a great place to compare

Ask Sergei a question

Common queries: BPAY | Tax | Overseas | Age

Credit Card Frequently Asked Questions

Applying

How long does it take to get a credit card?

Depending on your credit provider, it may take about 14 days to receive approval for your application and around seven to 10 days to receive your credit card. Larger lending institutions will generally process applications faster, whereas smaller lenders will usually take a little longer.

For more information on waiting periods, check your financial institution’s lending requirements and terms and conditions, including how this may impact your situation.

Do you need a bank account for a credit card?

No, you don’t need to open a bank account in order to obtain a credit card. You also don’t need to open a bank account in general to make credit card repayments; you can simply pay cash over the counter at your lending institution, pay through BPAY, or pay at Australia Post.

Can a retiree get a credit card?

This depends on your personal circumstances and your income source. You may be able to take out a credit card if you have a steady source of income. Like other applicants, you will have to meet certain lending requirements and fulfil the terms and conditions specific to your lender.

To apply for a credit card, you may need to provide specific documentation, like:

  • Proof of income
  • Meeting the minimum level of income
  • Documentation about any shares
  • Your superannuation income statement (self-funded retirees)
  • In some cases, your accountant’s details (if applicable).

Many banks have a no-age discrimination policy, which means they won’t deny credit cards to applicants based on their age.  The provider will assess retirees in a fair way that determines if the applicant can reliably pay back any outstanding account balances.

Can a pensioner get a credit card?

Whether or not a pensioner can get a credit card depends on the type of pension the person is on and whether or not they would be able to repay any outstanding debt. For instance, if the pensioner were on unemployment benefits, it’s highly unlikely they’d be provided with a credit card as they're viewed as high-risk to the lender (i.e. they may be unable to repay their outstanding account balance each month).

Overall, it depends on your income and if you satisfy the credit provider’s lending requirements.

To find out if you're the right fit, the lender will perform a risk assessment by taking into account a range of factors, including any income (e.g. from your superannuation, shares, the government, investments). To substantiate this, you’ll need to provide proof of your income with supporting documentation, like an income statement or a superannuation statement.

How do I apply for a credit card?

Step one: Use our free comparison tool to find the type of credit card that suits your budget and personal circumstances (e.g. balance transfer, rewards, low-interest, velocity, Qantas Frequent Flyer cards, etc.).

This is a vital first step, as you will easily be able to compare the features of different cards all in the one place from a range of cards from major brands, saving you time and stress.

Step two: Once you’ve found the right fit for your needs, click the “Go to provider” button, which will take you straight to the application page.

Step three: Review your chosen credit card’s details, including its fees and key benefits, and ensure you meet the minimum requirements to take out this card. Usually, you’ll need to:

  • Meet the minimum income requirements.
  • Be older than 18.
  • Be an Australian citizen or permanent resident (some credit cards are also available to temporary residents).
  • Have a suitable credit score.

Step four: Fill in your details with the provider. These details include personal and financial details. You’ll be required to provide supporting documentation, including proof of identity, proof of your residential address, your occupation, and income-validating documents (e.g. payslip and tax assessment notice). The provider will use this information to perform a credit check and prove your identity and financial standing.

After your lender completes their checks and determines that you satisfy their requirements, you’ll be approved and your credit card will be provided to you either in the mail or you may be able to opt to pick it up from your provider. Depending on your provider, it could take approximately 14 days for application approval and approximately seven to 10 days to receive your card.

So, are you ready to apply for the right credit card for your needs? Compare credit cards in minutes.

Can you get a credit card without a job?

You may be able to take out a credit card without a job if you have a source of income – this income doesn’t necessarily need to stem from a salary. However, your eligibility to take out a credit card lies within the provider’s lending guidelines and terms and conditions, which take into consideration your personal finances. As such, talk to a lending provider to better understand your eligibility.

Basics

How many credit cards should I have?

There is no magic number of credit cards you should have. Instead, the type of card has more importance to your personal needs and your household budget.

If you travel often or are planning for a trip away, you may like to consider a Qantas Frequent Flyer or Velocity card. These cards offer points towards your airline ticket and other travel perks when you spend money on eligible purchases. Zero and low-interest rate cards may help your budget while you spend on everyday purchases.  With any type of card, it’s important you check its terms and conditions so you’re aware of any fees or stipulations.

You can take out multiple credit cards if this better serves your needs. However, you must be able to track and manage each of your credit cards so you aren’t stuck with growing debt and, ultimately, a bad credit rating. If you have issues with overspending, you should consider either sticking to fewer cards or not using them altogether.

If you’re ready to see which cards could suit your needs, take advantage of our comparison tool, where you can see the features and rates of a range of cards from major brands – in just minutes!

What age can you get a credit card?

In Australia, you must be at least 18 years old to apply for a credit card.

How can I avoid credit card scams?

Scammers have developed multiple ways to steal your credit card details and, ultimately, your money. They may source your card details online, over the phone, while you’re at an ATM, or while you’re going about your daily routine.

Thankfully, there are ways to protect yourself from credit card scammers:

  • Never share your personal details or banking details with a person who claims they are a representative of your bank or financial institution. While they may sound legitimate, it’s always safer to hang up, call your bank directly, and confirm if the caller was legitimate. If the incident occurred over email, don’t reply. Instead, forward it onto your bank and get in touch with an official banking contact number to make them aware.
  • Always check your bank account and your statements to help spot unauthorised purchases. If you notice anything suspicious, contact your bank immediately.
  • Always keep your pin and banking passwords secure. Do not keep them written down in your wallet or phone, where it would be easy for a thief to access your card and your details together.
  • Avoid using public network connections on public computers to complete online banking.
  • Install reputable anti-virus software onto your computer and ensure it’s always up to date.
  • Be sure that all apps downloaded onto your smartphone are legitimate. Apps can provide a window through which scammers can compromise your phone and access your personal details.
  • Take advantage of anti-skimming card holders, which can prevent people from stealing your card details by inconspicuously scanning your bag or pockets on the go.
  • Report lost or misplaced cards to your bank right away.
  • Before using an ATM, inspect it carefully to see if anything looks suspicious (e.g. the card reader feels loose).
  • Keep a lock on your letterbox, especially when you’re awaiting a new card in the mail.

If you have fallen victim to fraud, contact your financial institution right away.

How do credit cards work?

Credit cards allow you to borrow money from your credit provider up to a specified limit if you make regular, monthly repayments. As you pay back the money you’ve borrowed, you’re also required to pay interest – a percentage that’s charged daily on any amounts owing. Interest is charged at a rate that your credit provider sets for your particular type of credit card.

You may not be required to pay for interest, however, if your credit card offers interest-free periods – periods where, up to a certain amount of days, interest won’t accrue on your purchases. If you follow the terms and conditions of your credit card and pay off your account balance by the end of the interest-free period, you aren’t required to pay any interest on your purchases.

Aside from interest charges, you’re also required to pay certain fees, including annual fees and monthly cash advance fees. If you pay the minimum amount by the due date, you can avoid late fees, and you can also avoid paying extra interest on your purchases. It’s important to remember, though, that the more you pay back on your balance, the less interest you’ll have to pay.

Depending on the type of credit card you have, you’ll also have access to certain features and promotions, including those interest-free periods, as well as rewards when you spend money on certain goods and services (i.e. Qantas Frequent Flyer points for eligible purchases).

There is a range of credit cards that suit a variety of spending habits and needs, including interest-free, low interest, rewards, and balance transfer cards among a variety of others. To find out which could work for you, compare a range of credit cards in minutes with our online comparison tool.

Is there GST on credit card charges?

No, you don’t pay GST (Goods and Services Tax) on credit card fees. GST is charged on the original purchase price, so won’t see an additional GST charge on your credit card statement.

Can you claim credit card interest on your tax return?

Under certain circumstances, yes. You would need to be able to prove that the credit card purchase was a tax-deductible transaction in order to claim the interest back on your tax return. We recommend you speak with your accountant for advice on your circumstances.

Cancelling

How do you cancel your credit card?

Before you can cancel your card, you’ll need to fully pay off your outstanding balance or transfer it to another card. It’s vital you cancel your credit card correctly, as you could default or incur penalty fees. Also, keep in mind that only primary cardholders can cancel their credit card. If you have a joint account, both account holders must provide permission to cancel the card.

You may wish to call your credit card provider and ask them to close your account, or you can cancel your card online. Your credit provider will ask you to verify your identity before moving forward with cancelling the account. If your lender has brick and mortar storefronts (e.g. a bank branch), you can also cancel your card in person.

When cancelling your card online, you may be able to take advantage of your internet banking app. Once you’ve ensured you have no pending transactions, cancelled any direct debits, and paid your account balance in full, you should be able to move forward with cancelling your card.

Your credit card provider should send out a written confirmation once your card is cancelled. If for any reason your credit provider isn’t able to cancel your credit card, they’ll outline the next steps you’ll need to take.

Can you cancel a credit card with a balance?

You can cancel your credit card if it’s lost or stolen, but you can’t cancel your account without either paying off the outstanding balance beforehand or going through a collections process – the latter will negatively impact your credit score.

If you need ideas on how you can pay off your debt, check out our tips to effectively manage your credit card repayments.

Credit score

Does opening a new credit card affect my credit score?

It can, as opening a new credit card increases your level of debt exposure, so you’re adding a record to your credit history. If you use your credit card correctly, your credit score will be positively impacted, whereas failing to make payments will result in a negative credit score.

It’s important you compare what’s on the market when you’re hunting down a new credit card, so you’re able to choose the type of card that fits into your lifestyle – not the other way around. We make it easy to compare a range of credit cards from some of Australia’s major brands in just minutes.

Does cancelling a credit card affect your credit score/credit rating?

Your credit score/credit rating won’t be negatively impacted if you cancel your card correctly (e.g. you pay off any outstanding balances and ensure there are no future direct debits). Paying off and closing a credit card doesn’t necessarily positively impact your rating, however, it does demonstrate your ability to manage and repay debts – something lenders view favourably when you apply for further credit.

You aren’t able to cancel a credit card with an outstanding balance; however, your lender may cancel your card if you default on your payment. This will negatively impact your credit score, as you would be in breach of your lender’s terms and conditions.

If you lose your credit card, it’s important you call up your credit provider right away and cancel the physical card. This won't impede your credit score, plus you could protect yourself from fraud.

Features

Can I use a credit card overseas?

Visa, Mastercard, and American Express are accepted in many countries around the world. However, you should always confirm your credit card will work at your destination before travelling. While your credit card may be accessible overseas, you should also learn about any fees that may come with using your card internationally – your provider will be able to tell you this information.

Furthermore, it’s important that you let your credit provider know that you are travelling overseas and the dates that you’re travelling between. It’s possible that your provider may notice transactions from overseas and think of it as suspicious activity, and may even freeze your card.

Can I withdraw cash from a credit card?

Most credit card providers will allow you to withdraw cash from a credit card. This is called a cash advance. It is important to know what fees are associated with this, however, as they are generally higher than your standard purchase rate. In most instances, you will be charged a percentage of the cash advance amount, and also charged interest immediately on this transaction. Interest-free periods generally do not apply to cash advances.

What is considered a cash advance on a credit card?

Examples of a cash advance on a credit card include the following:

  • withdrawing cash from an ATM
  • using BPAY to pay for bills when the biller doesn’t accept regular credit card payments
  • paying utility bills at the bank or the post office
  • online transfers from your credit account to a transaction account
  • gambling transactions
  • travellers’ cheques and foreign currency withdrawal.

When you use your credit card in this way, you’re charged a cash advance fee – a fee that is charged as a percentage of the transaction amount. Interest will also immediately accrue on the transaction at a high rate. As such, it can be expensive to constantly use your card in this way and should be limited where possible. Please refer to your credit card provider’s terms and conditions to confirm charges.

Can I make BPAY payments from a credit card?

Yes, you can make payments to BPAY billers who accept credit card payments. Some billers, however, won’t accept payment through credit cards. If this is the case, your provider may process your payment as a cash advance. Be aware that this will attract both a cash advance interest rate and a cash advance fee. In addition, you may not earn rewards points for these types of transactions.

Check with your biller before making a credit card payment to see if they accept this method of payment. Also, be aware of any extra fees or the interest rate of doing so.

Can I transfer money through my credit card?

Yes, it’s possible to transfer money through your credit card, but your ability to do so will depend on your credit provider. You may be able to transfer money from your credit card to a debit card through phone or online banking, or you may need to go into your local branch. Some providers may allow you to transfer money to accounts that aren’t linked.

There may be certain daily limits that apply to money transfers, and you should only ever transfer funds if you know you’ll be able to pay off the balance in time so that you aren’t dealing with high-interest charges. Keep in mind that you may also be hit with a cash advance fee.

Read over your credit card’s terms and conditions to ensure you’re well aware of any fees and limits that apply to any amount you transfer.

Fees

When are annual fees due for credit cards?

Annual credit card fees are payable once a year, either on or near the date where you first activated your credit card. If you’re not happy with your credit card’s annual fee, you may like to compare credit cards with our comparison tool to see if you’re paying more each year than another card with more competitive features and interest rates.

Are credit card annual fees tax deductible?

Credit card annual fees may be tax deductible if your credit card is used solely for business purposes. Be sure to talk to your accountant to determine how certain fees may be tax deductible.

Are credit card annual fees subject to GST?

No, annual credit card fees are not subject to GST (Goods and Services Tax).

Do all credit cards have an annual fee?

No, not all credit cards charge you fees each year, although plenty of them do. While annual fees on credit cards can vary greatly, there are a number that have $0 annual fees, or introductory offers to waive the annual fee for a period of time.

Interest

How can I lower my credit card interest rate?

An effective way to lower your credit card interest rate is to compare your card’s current rate to a range of other cards on the market and to switch over if you find a better deal. To get started, enter a few quick details into our free credit card comparison tool, and in minutes you’ll be able to see if you can get another card with a lower interest rate.

Be aware, though, that interest rates only account for a part of the bigger picture. Annual credit card fees are another expense you need to weigh up when choosing your credit card. Don’t let honeymoon introductory rates and offers distract you from considering what you’ll be paying in fees and interest rates once this period ends – something that will be outlined in the credit card’s terms and conditions.

Ensure you pay off as much of your outstanding balance as you’re able to each month. Doing so will reduce the amount of interest you owe and, ultimately, spend money on.

Do credit cards charge interest if you pay on time?

You won’t be charged interest if you operate your credit card correctly within your provider’s terms and conditions (i.e. you don’t go over the maximum amount of interest-free days and you pay off your outstanding balance in full).

Some credit cards, however, don’t offer interest-free days. This means that you’re charged interest on every purchase, and you’ll be required to pay off this balance in full every month.

What does the ‘up to 55 days interest-free’ period mean?

Many credit providers offer an interest-free period on purchases made using your credit card. This interest-free term generally relies on the full credit card balance being paid off each month. If the outstanding balance isn’t paid off within this period, the usual interest rate will then be charged daily on all purchases you make. Before comparing credit cards and completing an application, we recommend confirming the card provider’s interest-free offer in their terms and conditions.

How do I calculate credit card interest?

Credit card interest is calculated daily on the outstanding balance in your account. This outstanding amount is due monthly, and you must make minimum repayments to avoid late fees and a negative credit rating.

Let’s take a look at how interest can be charged on a credit card over 30 days with an outstanding balance of $2,000 and an interest rate of 12.99% per annum. For the sake of this example, this credit card does not have any interest-free periods.

Outstanding balanceInterest charged on purchases per annum (purchase rate )Daily purchase rateDaily interest chargedInterest charged per 30 days
$2,00012.99%0.00036%$0.72$21.60

N.B: Figures are rounded up.

Your monthly interest would total $21.60 when your account balance is due on the outstanding $2,000.

Interest charges vary depending on the provider, the purchase, the type of card and how many interest-free days there may be on your card. As such, it’s important to check the terms and conditions of the card to ensure you’re calculating the right amount of interest at the correct rate.

It’s also important you account for other charges – including annual fees, cash advance fees and late fees – when you don’t fulfil your monthly minimum repayments.

How does credit card interest work?

When you use your credit card, you’re not using your funds; you’re borrowing money from your credit provider. To cover the cost, your provider will charge you interest on all purchases (unless your card offers interest-free periods, where you aren’t required to pay interest on purchases if you fulfil your card’s terms and conditions). The quicker you pay off your outstanding balance, the less interest you’ll be required to pay.

Interest rates vary between types of credit cards and providers. Overall, however, the amount of interest you’re charged on purchases is up to your provider.

As an example, if your credit card had an outstanding balance of $1,500 and your credit card charged interest at a rate of 20% per annum, you would owe $24.66 in interest alone at the end of 30 days.

Outstanding balanceInterest charged on purchases per annum (purchase rate)Daily purchase rateDaily interest chargedInterest charged per 30 days
$1,50020%0.00055%$0.82$24.66

N.B: Figures are rounded up.

Some providers may offer introductory or “honeymoon” rates on their credit cards, where interest rates may be cheaper (or non-existent) for a period of time before they revert to their usual rate. It’s important that you look at the bigger picture when selecting a credit card, as you may need to pay expensive annual fees.

Be sure you compare the interest rates from a variety of credit providers with our online comparison tool. In minutes, you could find a card that suits your financial needs and spending habits as you compare a range of card features, fees, and interest rates from Australia’s major brands.

Limits

Can I still use my credit card if I’ve gone over its limit?

No, once you have reached the limit of your credit card, you won’t be able to use it to make any further purchases until repayments are made. If a transaction takes you over your limit, you should try to rectify this as soon as possible to reduce charges. Using your credit card in this way would be considered a breach of your lender’s terms and conditions.

Credit card providers are required to warn cardholders that they’re approaching their credit card limit. Some credit card providers will charge you with an over-limit fee, whereas others may require payment for any over-limit fees over the month. We recommend you confirm any charges and terms and conditions with the individual provider.

How can I increase my credit card limit?

You will need to contact your credit card provider either over the phone or online (depending on the provider) to request a credit limit increase on your card. You may be required to fill out an application form, and you may need to provide additional financial information, including payslips, to show your ability to manage a higher limit.

Some banks will only allow credit limit increases after a certain period of time after holding the card, and you could be knocked back if you don’t have a good account-keeping history.

Paying balance

What happens when I default on my credit card?

If you’re late on a credit card payment for an amount greater than $150 for more than 60 days, you can default, and this can remain on your credit card report for up to five years.

Defaults are more severe than a late repayment, the latter which is often considered late if your repayment is more than 14 days overdue. Late repayments of this nature can be listed on your credit report for up to two years.

Before you default, your credit provider will let you know by sending out written notices to your last recorded address. If you fail to respond to these notices and do default, your credit rating can be affected, and debt collectors may repossess certain items and sell them to recoup the outstanding balance.

If you haven’t contacted your credit card provider or responded to their notices for six or more months, this may be recorded on your report for seven years, and can seriously impede your ability to take out a new credit card or a loan down the track.

If you’re concerned about defaulting, it’s vital you talk to your credit provider before it’s too late; you may be able to apply for financial hardship through their financial support services, which could help with your repayment schedule.

What happens if I pay my credit card late?

The outcome can vary depending on your provider, but if you make a credit card payment that is more than 14 days overdue, this can go on your credit report for up to two years. You may also be hit with penalty fees.

If your repayment is over $150 and is more than 60 days overdue, you can default. Defaulting can stay on your credit report for up to five years, and can impact your success of taking out a new credit card or loan.

Your credit provider will contact you in writing to inform you of their intent to make a record of your default. If your lender has not been able to get in touch with you about the outstanding balance, especially within six months, this is considered a serious infringement and your default can remain on your report for seven years.

If you’re struggling to repay your credit card, it’s important you talk to your provider. Most providers have free financial support programs and financial hardship officers, who can help work out a viable plan for paying off your credit card.

How do I pay off my credit cards?

Paying off your credit card can be stressful, especially if you have multiple cards or a daunting amount of debt that keeps accumulating. Here are some tips for paying off your credit cards:

  1. Pay off the card with the highest interest rate OR the smallest debt. Cards with the highest interest rate can cause the largest amount of pain if you start to fall behind on repayments, which is why it’s a smart idea to pay those cards of as soon as you can.
  2. Consider a credit card balance transfer. You can transfer outstanding credit card debt from one credit card to a balance transfer card with a lower interest rate (for a period). Not all balance transfer cards are the same though; some have a transfer fee, while others may not attract any charges for consolidating your debts. As such, it’s essential you compare balance transfer cards to see which could be best-suited to your circumstances.
  3. Talk to your credit card provider. Many credit lenders offer financial support and hardship services. This can include free advice and additional flexibility with your credit card, including lower interest rates (for a set period) or waived late fees. You can also use these resources to seek further advice on how to close any credit cards, if necessary.

For more information, read more about how to pay off your credit card.

How do I pay my credit card from another bank?

You can use your credit card’s BPAY information, which appears on your credit card statement, to pay off your outstanding balance from another bank. Options to pay may differ between banks and providers; however, BPAY is usually available for most banks. Payments between providers may take a few business days, so be sure to keep this in mind when making a payment.

You may also be able to go to Australia Post to pay off your outstanding balance with money from another bank.

How often should I pay my credit card?

You should endeavour to pay off as much as you can on your outstanding credit card balance each month. This will keep outstanding balances manageable, and you will save money on interest.

However, you are only required to make one minimum monthly repayment to avoid late fees. Your bank statement will outline how long it would take you to pay off your outstanding balance if you only pay off the minimum monthly amount.

Can I make credit card payments with another credit card?

If you use a credit card to pay off another, it would be considered a cash advance and attract higher fees and interest rates. We wouldn’t advise that you use your credit card in this way, as your debt can quickly become unmanageable.

If you’re looking to consolidate your debts, you may instead wish to consider a balance transfer. This is where you’re able to transfer debt from one or multiple credit cards to a new credit card with a usually lower, temporary interest rate.

To find a balance transfer card to suit your circumstances, compare credit cards with our comparison tool – including their balance transfer, purchase rate, and annual fees.

Rewards

Can I use my credit card rewards points to get cash back?

Yes, some credit providers offer cash back as your reward for using a particular credit card to pay for certain items. Other providers may offer reward points that you can convert to cash. So, instead of receiving points like you would through Frequent Flyer programs, you’d instead receive cash back on your credit spending.

Which credit card rewards are available to me?

Try out our credit card comparison tool to find out which rewards credit cards are available to you. From a range of major providers, you can find credit cards that reward your spend with Qantas points, Velocity points, or money back for every dollar you spend.

Which credit card offers the best rewards?

This depends on your individual preferences and your financial circumstances. If you enjoy travelling, you may find the best rewards card is one that rewards your credit card spend with Frequent Flyer points. Alternatively, you may find one particular credit card rewards your spend at a shop you often visit (e.g. the supermarket).

To find the best rewards cards for your needs, take advantage of our credit card comparison tool. We make it easy for you to discover a card that suits your needs.

Can I change or switch rewards programs?

While most credit cards offer one specific rewards program, some may allow you to convert your rewards points to Frequent Flyer points. It’s best to confirm the rewards program options your provider has in place before completing a credit card application.

Looking to see what other rewards cards are out there? Take advantage of our credit card comparison tool, where you may find the card that has a rewards system suited to your needs.

Shopping for cards

How do I decide which credit card is right for me?

With so many credit cards on the market, it can be challenging to pick the one that suits your needs the best. Some key factors to consider include:

  • Balance transfer offers. If you are looking for a way to cut down some costs, transferring your existing credit card debt to a new card with an interest-free offer can help you pay it off quicker.
  • Purchase rate. The purchase rate is the rate of interest you’re charged on your credit card purchases. If you do not pay off your credit card balance in full each month and are paying interest regularly, perhaps a card with a lower purchase rate can help.
  • If you’re looking to get something extra from your purchases, perhaps a rewards card may be for you. You can utilise rewards programs, attract Frequent Flyer points when you shop or enjoy additional insurance for your purchases and travels. All these additional benefits may be money back in your pocket, but keep in mind that rewards cards often come with higher interest rates or annual fees.

To find the card for your needs, compare a range of credit cards from some of Australia’s major brands with our free comparison tool. Here you’ll easily be able to compare interest rates, fees, rewards, and other features and restrictions in just minutes.

Are some card-issuing banks better than others?

At any given moment, some banks, credit unions or building societies may be offering more attractive products than others. This may be because a credit card has a low (or no) interest rate, no annual fees, or rewards for each dollar you spend. However, a great card for one person may be completely wrong for someone else.

When searching for a new credit card, you should be looking for the most suitable product for your needs – and many financial institutions will offer multiple products to help you do just that.

That’s why we have our comparison service; to help you sort through your options and find products that suit your spending. Take a look through the different cards we have on offer to find a card with the features and promotions that suit your spending habits and budget.

Transferring balance

Will getting a balance transfer credit card help me get out of debt?

Yes, a balance transfer credit card can help you get out of credit card debt if you use the card correctly and work to repay your debt within the card’s low rate period. Balance transfer credit cards have a lower (or no) interest rate for a set period of time (promotional period), which makes it easier for you to consolidate your debt and pay down your outstanding balance.

However, there is a catch; if you don’t pay off this outstanding amount before the lower interest rate ceases, you’ll be hit with a high-interest rate on your entire outstanding balance. On top of this, balance transfer cards often come with annual fees, and some charge you a balance transfer fee on the amount of debt you transfer over. This may put you in a worse position than before, especially if this new interest rate is greater than the interest you were paying before you completed a balance transfer.

Before you decide on a balance transfer card, be sure to read the card’s terms and conditions carefully, so you are well aware of any fees, promotional periods, and any restrictions around your balance transfer.

Furthermore, don’t forget that these types of cards won’t cure unhealthy spending habits. If you’re struggling with debt and spending too much on your credit card, make sure you talk to your credit card provider’s financial counsellor or financial hardship officer. They may be able to work out a lower interest rate on your debt for a period of time, or may waive certain fees.

If you’re ready to find a balance transfer card that suits your repayment budget, compare our balance transfer credit cards to find one with a competitive interest rate and reasonable fees.

What is a balance transfer credit card?

A balance transfer credit card allows you to transfer any outstanding credit card balances to a new card with a lower interest rate that is fixed for a set period of time (otherwise known as an introductory or “honeymoon” offer).

Balance transfer cards can make paying down debt more manageable, as you’ll be paying a smaller amount of interest on the balance transferred than you would with a card with higher interest. Depending on the card and its promotion, you may even avoid a balance transfer fee as well.

When using a balance transfer card, it’s imperative you take note of the introductory rate’s expiry date, where the interest charged on purchases reverts to its (more expensive) standard rate. Also, keep in mind that it may reflect poorly on your credit report if you’re constantly transferring account balances between cards.

To discover the different types of balance transfer credit cards, and to find one with the features, fees, and interest rates that could suit your financial needs, compare credit cards in seconds.

Should I transfer my existing credit card balance to a new card?

Transferring your existing credit card balance to a new card can be a great way to save on interest and, in turn, reduce your debt sooner. Many card providers have special balance transfer offers with a lower interest rate for a number of months on the balance you move to this card. This can give you a good window to pay down your debt without extra interest being charged.

If you’re considering a balance transfer, compare our range of credit cards and you could find a card that suits your needs and budget; including cards with competitive interest rates, low or no balance transfer fees, and reasonable fees.

Can I transfer funds from my credit card to my bank account?

Depending on your credit card provider, you may be able to transfer money from your credit card to your bank account – even if the bank account is with another provider.

Methods and restrictions surrounding transferring funds from your credit card to your bank account can vary, depending on your credit provider. It’s better to call up your provider and ask if you can transfer funds, and if there are any fees associated with this transaction.

You also need to ensure the bank you’re sending money to accepts credit card transfers. If they do, head onto your online banking (or call your provider) and simply follow the prompts to transfer your funds. If you’re sending money to the same bank as your credit card, funds should appear faster than they would if you were sending to a different bank.

If your transfer is considered a cash advance, you’ll attract a cash advance fee on this transaction, and you’ll also be charged interest at the cash advance rate, which is often higher than the usual interest charged on normal purchases. Furthermore, your transfer will not form part of your interest-free days, so you’ll accrue interest right away.

Using your card

How do I use my credit card?

A credit card should be used as another tool for you to pay for the things you need each month (e.g. groceries, school uniforms, holidays), in advance of having the money to pay for them. You could also make the most of your monthly purchases by using a credit card that attracts reward points for your shopping, leading to cheaper flights/discount opportunities in the future.

Keep in mind, however, that you should always endeavour to pay off your monthly balance in full so you attract the least amount of interest possible. This way, you can still use credit cards each month to pay for things you need while avoiding overwhelming debt.

Can a retailer charge me extra for using a credit card?

Yes, retailers can charge you extra for using your credit card. Why? When you use your credit card to purchase an item, the business attracts a fee for processing your payment. Some businesses may account for these costs in the items they sell, while others may charge you the cost as a payment surcharge.

Some merchants may also set a minimum credit card spend, so if you use your credit card to pay for goods under this minimum amount (i.e. $10 minimum spend), you can attract a surcharge on your transaction.

In 2016, however, the Competition and Consumer Amendment (Payment Surcharges) Act 2016 banned businesses from charging excessive payment surcharges. The Reserve Bank of Australia (RBA) views excessive credit card surcharges as charges that go beyond what the business must pay to process the transaction.

Can a merchant refuse my credit card?

Some merchants may refuse your credit card if it has expired, if you’ve reached your spending limit, or if they suspect fraudulent activity on your card. Some other merchants may not support certain credit cards, as they may find the processing fees too expensive – this can be especially true for smaller businesses that sell cheaper goods.

What happens if I don’t use my credit card?

Credit card providers will require a minimum repayment each month on your credit card. Generally, this will be around 3% or a minimum dollar value (whichever is greater). However, if there is no balance owing on your credit card, no payment would be required (aside from any annual fees). You should always check your statement each month to ensure you stay on top of your transactions, including direct debits or an annual fee if applicable.

Please refer to the provider’s terms and conditions for further details on required payments.

Can I use a debit card as a credit card?

If you’re using a debit card and are about to pay via an EFTPOS machine, you’re able to press ‘Credit’ (CR) to make the purchase. As you’re still using your own funds to make the purchase, you won’t be charged interest on these types of transactions. You are also able to use your debit card for credit card purchases online as well. These transactions can be seen as ‘pending’ in your account for a few days, though, as it can take your provider a while to finalise this transaction.

Can I use a credit card to pay my taxes?

Yes, you can use your credit card to pay your taxes. The Australian Taxation Office (ATO) says this is one of the quickest and easiest ways to pay, alongside using BPAY or a debit card. If you’re paying with a credit or a debit card, you’ll need your payment reference number (PRN) and a Visa, American Express, or a MasterCard to be able to make the payment.

Please note that there are card payment fees when you use your credit card to pay for your taxes. You’ll be made aware of the fee before you finalise your payment to the ATO.