In a nutshell, your credit card is a short term loan which lets you purchase things you need straight away. You would typically need to apply for a credit card to get one.
However, you can only spend up to a predetermined amount of money. This is known as ‘credit limit’. You might also owe your lender interest for borrowing their money if you don’t pay off your credit card balance before the due date.
Credit card holders can earn rewards, known as points, which can be used for shopping, flights and hotel accommodation. Some lenders also offer premium card holders complimentary travel insurance.
We’ll walk you through some of the different types of credit cards available to Australians. If your question isn’t answered there, try our FAQ page or credit card glossary.
How can you pay off your credit card
Consistently paying off your credit card balance not only saves you from accumulating greater amounts of interest, but also has a positive effect on your credit score. We’ve explored several strategies you can employ to pay off your card.
If you’re in a situation where you need cash, but your bank account is dry, your credit card can be used to secure the funds (usually from an ATM). This transaction is known as a cash advance. While it’s ideally suited for situations where you cannot get money any other way, a cash advance can be used in normal situations.
Also called ‘cash loans’, cash advances can be obtained from a lending institution. We explain how they work and list some necessary precautions.
Credit card reforms
With Australians owing billions of dollars on credit cards, the Government proposed a round of credit card reforms in 2016 aimed at reducing confusion around credit card products. In addition, the Reserve Bank of Australia has banned fixed-rate credit card surcharges for major businesses.
Exclusive credit card offers
Banks and financial institutions historically send their high-income account holders exclusive offers. If accepted, these offers entail a host of rewards and benefits commonly reserved for the business elite and the royalty.
When choosing the right credit card for your lifestyle and budget, it is crucial to ensure you track down a suitable product. Here at comparethemarket.com.au, we can help you make the right choice by comparing from a range of trusted credit card lenders.