While not everyone has a credit card, it is a convenient way to spread costs. To ensure you get the best card for you, you need to understand how you use it.
Do you pay your card in full each month?
Without stating the obvious, by not paying your balance in full each month, you’re essentially throwing money down the drain on interest payments. That being said, not everyone is in a position to clear their monthly balance. If this is you, then you should consider a card that offers no, or low, interest to limit the how much is added to your balance.
Compare low- and no-interest cards at Infochoice.com.au
Are the rewards worth the fee?
Fees on credit cards can vary between $30 and $450 per year, and while the rewards, such as frequent flyer points, free travel insurance or even concierge services, can seem appealing you should question whether you use them to their full value. If you use your card only for emergencies, rather than regular spending, then a no-fee card may suit you best.
Compare no fee cards at Creditcardfinder.com.au
Are interest charges outweighing points collected?
Interest charges on cards that offer reward points are often higher than those with no loyalty scheme attached. However, if you’re truly maximising the rewards available, and this takes some skill to do, then the interest rate you pay may be less important than the points you earn. The associated reward program should also be aligned with other reward programs of which you are a member – e.g. Qantas Frequent Flyer.
Compare cards with reward programs at Canstar.com.au
Where can it be used and how much do you pay on transaction fees?
It’s worth thinking about where you use your card and how much retailers charge you for the privilege. While American Express cards often offer greater rewards, they are not as widely accepted as others, and retailers often charge a much greater fee when they are accepted.
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