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All credit cards allow you to spend borrow and spend money from a bank and then pay it back over time – usually with interest. What sets different credit cards apart are their features, including interest rates, fees, rewards, introductory offers and perks.
Understanding these features (whether standard or unique to the card) can help you choose a credit card that’s right for your needs. So, let's look at what you need to know about both the basic and extra features that credit cards offer.
When you apply for a credit card, you can choose a credit limit or elect to apply for the maximum amount of credit available to you. The credit limit you're approved for is based on a range of factors, including your income, credit history and other details on your application. Once you have a credit card, you can request a higher or lower credit limit.
Your credit limit can also be affected by the card's minimum and maximum credit limits options. For example, if a card has a minimum credit limit of $1,000, you couldn't request a limit lower than that amount. On the flipside, if a card offered a maximum limit of $15,000, you couldn't request a limit higher than that.
There are two main credit card interest rates: the purchase and the cash advance rate. The purchase interest rate applies to most everyday transactions and ranges from around 8% p.a. to 22% p.a. Low rate credit cards have the lowest standard variable interest rates for purchases.
The cash advance interest rate applies when you use your credit card to withdraw cash from an ATM, or for other “cash equivalent” payments such as buying foreign currency or gambling. Cash advance interest rates are almost always higher than the purchase rate, typically around 19-22% p.a. for most cards. Cash advances are also ineligible for interest-free days.
Nearly all credit cards offer up to a number of interest-free days on purchases, such as "up to 55 days", when you pay your card off in full by the statement due date. If you meet this requirement, the interest-free period begins on the first day of your statement cycle and typically ends on the statement due date.
If you don’t pay the full amount off by the due date, the purchase rate of interest will apply to transactions made during the previous statement period, from the day that each transaction was made. You may then have to wait another statement cycle to be eligible for interest-free days again.
Promotional or introductory offers are designed to provide benefits to new customers for a limited time. Credit cards can have more than one of these value-adding deals:
Financial institutions protect your account in a couple of ways. You’ll need to have kept your account information private and must not have contributed to the loss to be eligible to claim for credit card fraud:
Instead of swiping or inserting your credit card at the checkout, you now have the following tap-and-go options:
Some credit cards let you earn rewards points for every dollar you spend, which can be an easy way to rack up rewards for using your card. These cards generally come with higher annual fees and interest rates, though. So it’s important to compare your options and make sure the value of the rewards program outweighs the costs.
As there are different types of rewards credit cards on the market, you should be able to find one that rewards how you spend on your card. The three main types to consider include:
Premium gold, platinum and black credit cards feature complimentary insurances for when you travel and make important purchases. The range of coverage varies but often includes:
Make sure you also consider these common credit card costs:
If you want to keep cost down you should pay your credit card balance in full each month. However, credit card providers also list a minimum repayment amount of around 2-3% of the closing balance. If you only pay this minimum amount, it can take years to pay off your credit card and cost hundreds or thousands of dollars in interest.
Your credit card statement includes details of how long it would take to pay off your balance if you only made the minimum payment each month. It also has information about how to make credit card repayments. Two common methods include BPAY and bank transfers. Statements can be emailed or accessed via Internet banking. They can also be physically mailed to you, although there may be an additional fee for printed statements.
Whether you’re looking for a new card or want to get more out of the one you already have, it’s important to understand the range of features so that you can make your credit card work for you. If you have a question about credit card features and using a credit card, ask us using the form at the bottom of this page.
*The credit card offers on this page are chosen from a range of credit cards available to us and are not representative of all the products available in the market. The use of the terms "best" and "top" are not product ratings and are subject to our disclaimer. There is no perfect order or perfect ranking system for the products we list on our Site, so we provide you with the functionality to self-select, re-order and compare products. The initial display order is influenced by a range of factors including conversion rates, product costs and commercial arrangements, so please don't interpret the listing order as an endorsement or recommendation from us. We're happy to provide you with the tools you need to make better decisions, but we'd like you to make your own decisions and compare and assess products based on your own preferences, circumstances and needs.
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