When it comes to choosing the best credit card, you need to consider how much you can set aside for monthly payments as well as how you’ll use it. Many financial advisors will compare credit card research as equal parts art and science because no credit card is right for everyone. Understanding your options can help you find a card that’s the best fit for your spending habits.
Check Your Credit Score
The first step on your Australian credit card comparison journey is checking your credit. You can find the perfect credit card for your needs only to be rejected due to your poor credit score. Most companies agree that a Good or higher credit score is required to receive the best types of lending products with ideal interest rates. Although ranges vary, credit score groupings are:
- Fair Credit Score: Ranges from 580-669
- Good Credit Score: Ranges from 670-739
- Very Good Credit Score: Ranges from 740 to 799
- Excellent Credit Score: 800 or higher
In Australia, the 3 major credit reporting bodies are Experian, Equifax, and Illion. You can ask them for a soft credit score so it doesn’t affect your credit. When applying for a credit card, banks will often issue hard credit checks, which will damage your credit, so the fewer, the better.
Identity Credit Card Type Based on Needs
Most credit cards are separated into three distinct categories:
- Cards that help you improve credit
- Cards that save your money on interests
- Cards that earn you rewards
If you want to build credit: Whether you’re looking to build credit as a new credit card owner or after bankruptcy, purchase either a student credit card or a secured credit card. Student credit cards require no money down and are easy to qualify for, while a secured credit card requires an upfront cost, which is returned to you if you close the account in good standing.
If you want a low interest rate: Your best option is to buy into a card with a low annual percentage rate (APR) or balance transfer. These cards are also perfect for people who only use credit in an emergency, need to pay off high-interest debt or have irregular incomes.
If you want to earn rewards: Credit card owners who wish to earn rewards points, travel-specific rewards, or cash back have many options to choose from. They’ll need to consider how they want to earn rewards, but this can be narrowed down by how you spend your money.
Apply for Credit Cards That Offer the Best Value
Now that you have an idea of which type of card works best for your needs, you need to start narrowing down your choices based on the overall value they provide in the long term.
Cards That Build Credit
Since you’re interested in building credit, try to find a card that offers an automatic limit increase or one that offers interest on your deposit. A secured credit card that provides compound interest on your down payment will mean you’ll get back more money than you initially put in.
Cards With Low-Interest
Cardholders that are getting separated credit to pay off debt will want it to come with a debt payoff planner and no penalties for a time period. Credit holders that want to experience lower interest rates will simply benefit from less money owing if they don’t pay their balance off fully.
Cards That Earn Rewards
Regardless of what type of reward card you’re purchasing, you’ll want it to come with a lower spending threshold and no expiry dates on earned rewards. If you only have to pay $1 per 1 mile earned instead of $2, your money will go farther, especially without an expiry date.