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Should you get a credit card?

Credit cards can help you build credit history and some offer valuable perks, but they can also be expensive. Here’s how to decide if you want one.

What you need to know:

  • A credit card can help you build good credit history and access funds in an emergency.
  • Some cards offer benefits including rewards, interest-free periods and extras like travel insurance.
  • But credit cards can have very high interest rates, up to around 30%.
  • If you're not careful, a credit card could lead to serious debt and other issues.

Millions of Australians already have a credit card (or cards). In fact, the number of credit cards in circulation has been gradually increasing since May 2022, according to Reserve Bank of Australia (RBA) data.

But Finder research has also found that 72% of Australians could manage their money without a credit card. So most people don't technically need a credit card, but choose to get one for a range of different reasons. Here are some key benefits and risks you should consider first.

Benefits of getting a credit card

It helps you build credit history

Getting a credit card and using it responsibly is a simple way to improve your credit score. This is because details of the card are added to your credit report as soon as you apply. Once you're approved, your repayment history is also recorded, with on-time payments adding to your credit score.

You can use it for emergencies and unplanned expenses

Finder research shows 40% of Australians got their most recent credit card for emergencies, making it the most popular reason to get one. Basically, a credit card means you can quickly pay for any unexpected, essential costs – such as medical bills or car repairs – especially if you don't have enough money in your emergency savings account.

Tip: Make use of the interest-free period for purchases

If you repay the total amount shown on your credit card statement, you'll typically get interest-free days for purchases. This gives you a way to use a credit card without paying any interest.

Security

With a credit card, the funds used for purchases are taken from the credit limit rather than your bank account. So, if a credit card is used for fraud, you won't be directly out-of-pocket while you wait for the issue to be sorted.

As well as being able to get refunded for fraudulent transactions, most credit cards offer security monitoring for your account. Some cards also let you put a temporary lock on your account, and you can also cancel a card at any time if it's stolen.

Credit card rewards

Rewards are the second-most popular reason people get a credit card, according to Finder research. Most rewards credit cards earn points for each $1 of everyday spending and many offer sign-up bonuses.

If you pay as you go or repay the total amount on each statement, a reward or frequent flyer credit card can also be interest-free. This makes it a simple way to get more value from everyday spending. But you do also need to check the annual fee to help decide if the potential value you'll get from rewards is worth it.

Tip: Consider credit card insurance and other perks

When you use a credit card responsibly, you can get added value from other perks that help you save on costs or unlock exclusive experiences. This includes international travel insurance and airport lounge access and complimentary travel or flight benefits.

Credit card benefits and drawbacks

Risks of getting a credit card

Debt

Australians have $18.1 billion in credit card debt that's being charged interest, according to RBA data. This interest compounds over time, which means you could end up paying interest on interest in a worst case scenario.

Credit card interest rates are also higher than a lot of other loans, ranging from around 8% to 28% for purchases (they can be higher for cash advances). So if you spend more than you can afford to pay back on a credit card, you could end up in debt. Finder research in December 2023 also found 13% of Australians have missed a repayment in the past 3 months, which can lead to late payment fees, defaults and a lower credit score.

It can affect your home loan application

A history of responsibly using a credit card can indicate to lenders that you're able to manage credit. But credit cards also affect how much you can borrow for a home loan, with the total credit limit (or limits), which means a high credit limit can have a big impact on your borrowing power.

They'll also consider your regular spending and credit history. So if you have a record of late payments and other issues could impact your chances of getting approved.

Credit card surcharges

Businesses are allowed to apply a surcharge for both debit and credit cards, based on what it costs the business to process the transaction. But credit card transactions cost more to process.

According to the Australian Competition and Consumer Commission (ACCC), Mastercard and Visa credit card transactions are an average of 0.5 and 1 percentage point higher than debit cards. American Express transactions also cost businesses more to process, so surcharges for these cards could be even higher.

Risk of overspending

Credit cards give you access to funds you may not already have available, which makes it easy for some people to overspend. For example, Finder research in 2024 found almost half of credit card holders (44%) have made unplanned purchases on their card over a 12-month period. This included 14% who said they were swept up by shopping sales and 1% who said they were spending to try and keep up with family and friends.

As well as unplanned spending, the incentive to get rewards can lead to spending more than you normally would. This increases the risk that you won't be able to repay the total amount owed on your credit card when you get a statement. And that can lead to interest charges, as well as debt.

Common credit card myths

5 questions to help you decide if you should get a credit card

  1. What's the main reason you want a credit card?
  2. What would you use it to pay for?
  3. How much can you afford to pay in account fees and charges?
  4. Would you be able to pay off the card's balance each month when you get a statement?
  5. Do you receive regular income of at least $15,000 (the lowest requirement)?

Answering these questions allows you to focus on what you want a credit card for and how well you would manage it. Some of your answers can also help you compare cards if you decide you want one.

For example, if you want a credit card for rewards and plan to pay it off each month, you could compare rewards and frequent flyer cards. But if you don't think you'll pay off the card each month, you might consider a low rate card without rewards – or decide not to get a credit card right now.

Compare credit cards

1 - 8 of 14
Name Purchase rate p.a. Bonus points Points per $ spent Interest-free period Balance transfer rate p.a. Annual fee
St.George Vertigo Card
Purchase rate p.a.
13.99%
Bonus points
N/A
Points per $ spent
N/A
Interest-free period
Up to 55 days on purchases
Balance transfer rate p.a.
0% for 28 months with 1% balance transfer fee, then 21.49%
Annual fee
$55
Go to siteMore Info
0% Balance Transfer Offer
Get a 0% p.a. interest rate on balance transfers for 28 months (with a 1% balance transfer fee).
Kogan Money Card – Exclusive Offer
ExclusiveKogan Rewards Program
Purchase rate p.a.
20.99%
Bonus points
N/A
Points per $ spent
1
Interest-free period
Up to 55 days on purchases
Balance transfer rate p.a.
0% for 18 months with 1% balance transfer fee, then 21.74%
Annual fee
$0
Go to siteMore Info
0% Balance Transfer Offer
Get 0% p.a. on balance transfers for 18 months with a 1% balance transfer fee. Plus an ongoing $0 annual fee.
Citi Clear Card - Exclusive Offer
Exclusive
Purchase rate p.a.
14.99%
Bonus points
N/A
Points per $ spent
N/A
Interest-free period
Up to 55 days on purchases
Balance transfer rate p.a.
0% for 24 months with 1.5% balance transfer fee, then 22.24%
Annual fee
$49 first year ($99 after)
Go to siteMore Info
0% Balance Transfer Offer & First-Year Annual Fee Discount
Offers 0% p.a. on balance transfers for 24 months (with 1.5% balance transfer fee) and a $49 first-year annual fee.
NAB Low Rate Credit Card
Purchase rate p.a.
13.49%
Bonus points
N/A
Points per $ spent
N/A
Interest-free period
Up to 55 days on purchases
Balance transfer rate p.a.
0% for 28 months with 2% balance transfer fee, then 21.74%
Annual fee
$0 first year ($59 after)
Go to siteMore Info
0% Balance Transfer Offer
Get a 0% p.a. interest rate on balance transfers for the first 28 months (with a 2% BT fee). Plus, save with a $0 first-year annual fee.
Qantas Premier Platinum
Qantas Frequent Flyer
Purchase rate p.a.
19.99%
Bonus points
80,000
Points per $ spent
1
Interest-free period
Up to 55 days on purchases
Balance transfer rate p.a.
0% for 12 months, then 21.99%
Annual fee
$349 first year ($399 after)
Go to siteMore Info
Up to 80,000 Bonus Points
Earn up to 80,000 bonus Qantas Points. Plus, save with a reduced first-year annual fee and 0% p.a. for 12 months on balance transfers. Ends on 01 May 2024.
ING Orange One Low Rate
Purchase rate p.a.
11.99%
Bonus points
N/A
Points per $ spent
N/A
Interest-free period
Up to 45 days on purchases
Balance transfer rate p.a.
N/A
Annual fee
$0
Go to siteMore Info
100% foreign transaction fee rebates
$0 annual fee and 100% foreign transaction fee rebates for customers with an Orange Everyday account who meet the minimum deposit and spend requirements.
ANZ Rewards Black Credit Card
Finder AwardANZ Rewards Program
Purchase rate p.a.
20.99%
Bonus points
180,000
Points per $ spent
2
Interest-free period
Up to 55 days on purchases
Balance transfer rate p.a.
21.99%
Annual fee
$375
Go to siteMore Info
180,000 Bonus Points & $150 back
Get 180,000 bonus ANZ Reward Points (worth $800+ in digital gift cards) and $150 back when you spend $3,000 in the first 3 months.
American Express Qantas Business Rewards Card
Qantas Business Rewards
Purchase rate p.a.
0%
Bonus points
170,000
Points per $ spent
1.25
Interest-free period
Up to 51 days on purchases
Balance transfer rate p.a.
N/A
Annual fee
$450
Go to siteMore Info
170,000 Bonus Qantas Points Offer
(ABN holders w/ $75k revenue). Earn 170,000 bonus Qantas Points when you spend $6,000 in the first 3 months.
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Showing 8 of 14 results

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