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.