From interest-free purchases to bonus point offers, here's how you can get more bang for your buck this Christmas.
If you're planning to use a credit card this holiday season, you could get extra value from one that comes with an introductory offer. While credit card companies use these promotions to entice you to sign up before Christmas, they can also help you save on interest or give you bonus points you can redeem for rewards such as travel, gift cards and merchandise.
Use this guide to compare the latest credit card offers, as well as the benefits and terms and conditions you should consider to get the most value out of your new card this Christmas.
Compare cards with 0% purchase rate offers
Credit cards with 0% purchase rates
A 0% purchase credit card offer gives you a way to make interest-free purchases with your credit card during the promotional period, which is usually between 3 and 13 months. So rather than collecting interest on your Christmas gifts, you can pay off your balance without any additional costs while the promotion is in place.
But if you don't pay off your entire balance by the end of the introductory period, the remaining balance will start collecting interest at the card's standard purchase rate. This is usually between 13% p.a. to 22% p.a. It's also important to note that while purchases enjoy the 0% interest rate, ATM cash advances or cash-equivalent transactions (such as buying traveller's cheques, gambling or conducting a balance transfer) are not eligible for the interest-free promotion.
Some 0% interest credit cards also come with other features such as frequent flyer programs, complimentary insurance and other perks, as well as costs such as annual fees. So compare a few options to make sure you apply for the right card.
How much can I save with a 0% purchase rate credit card?
Exactly how much you can save will depend on the length of the promotional period, how much you spend and whether you can pay it all off before the offer ends. Let's say you spend $1,000 at Christmas this year and plan to pay it off over a year. If you got a credit card that offered 0% on purchases for 12 months, you could save $170 on interest when compared to a card with a regular standard variable interest rate of 17% p.a. Note that note that this does not include any card annual fees or other charges.
Bonus points offers
Getting a new credit card with sign-up bonus points can give you hundreds or even thousands of extra reward points. Usually you need to meet a minimum spend requirement to get these points. For example, an offer could provide 30,000 bonus points when you spend $1,500 in the first 3 months.
With spending on presents, food, travel and other holiday items quickly adding up, using one of these credit cards for your Christmas spending could be an easy way to meet the eligibility requirement for extra points. But these cards often come with higher annual fees and interest rates than some other options, so make sure that the value of the reward points isn't outweighed by the costs of the card.
How much can I save with a bonus points credit card?
While there is no fixed dollar value for reward points, sign-up bonuses can provide hundreds of dollars of value when you redeem them. For example, the Qantas Premier Platinum currently offers a bonus 80,000 Qantas Points when you apply by 31 August 2018 and spend $7,000 in the first 90 days from card approval.
That’s enough points for a one-way economy flight from Sydney to London (60,000 Qantas Points). In comparison, buying a Qantas ticket could cost anywhere from $632 to $1,549 (based on booking information from 14 November 2017). So as long as the spending requirement suits your budget, bonus points could be an easy way to get extra value from your new credit card around Christmas.
Compare credit cards with bonus point offers
What other credit card offers can I get at Christmas?
While 0% purchase credit cards and rewards credit cards with bonus points are obvious ways to get more value from your card this Christmas, some other card offers and features that could come in handy this festive season include:
- Cashback offers. Cashback credit cards reward you with credit for your account, which could mean more cash in your pocket this Christmas. Depending on the card, you can get cashback at the end of a period (a percentage of your expenditure), convert your reward points into cash instead of goods or as part of a promotional offer when you sign up for the card. For example, you may be offered $200 cashback when you spend $500 in the first 3 months from card approval. Some of these deals are further sweetened with 0% interest rates or $0 annual fees.
- Purchase rate and balance transfer offers. If you're repaying a debt but also need access to cash this Christmas, a card with 0% interest on balance transfers and 0% purchase rate could come in handy. Most cards only offer a 0% offer on one or the other, so this can be a good way to take advantage of both. However, if you want to avoid paying interest, make sure you understand when both of the 0% promotional rates end. Otherwise, you could end up collecting interest on either your purchase or balance transfer and continue building up debt.
- Balance transfer offers. If you're struggling to repay a high-interest debt, a balance transfer credit card can help you repay your debt without the cost of interest for a promotional period. Currently, most Australian balance transfers have a 0% interest rate for a promotional period of 6 to 24 months. So if you want to get your debt in control before Christmas or need a means of debt consolidation after you've paid for Christmas gifts on plastic, a balance transfer credit card could come in handy.
What else should I look at when comparing credit card offers this Christmas?
Here are some points to consider before choosing a credit card for your Christmas shopping:
- Promotional period. It is important to note that the promotional rate or reward usually only applies during the introductory period. After that, the interest rate will revert to a higher standard rate, points will be earned at a standard rate per $1 spent and any reduced or waived annual fee deals will not apply. This basically means your costs for the card will go up, so it's important to repay your debts and understand what fees are involved before this happens.
- Offer end date. This refers to the deadline for applying for a card that has an introductory offer. The offer usually ends by a stipulated date and you may want to catch it before that day. For example, a card may offer 0% interest on purchases for 6 months if you apply by 31 December.
- Eligibility requirements. Depending on the card, you'll usually need to be a minimum of 18 years of age, be an Australian citizen or permanent resident, have a good credit history and meet a minimum income requirement. Some cards, such as balance transfers, also have restrictions regarding how much you can transfer and which banks you can transfer from, which is important to know before applying. You can see this guide for a list of the eligibility requirements you can usually expect when applying for a credit card.
- Eligible purchases.The 0% purchase rate is only applicable to “eligible purchases”. These usually exclude utility bills, gambling purchases, cash-equivalent transactions and balance transfers.
- Annual fee. Some credit cards offer competitive frequent flyer points bonuses, high reward earn rates and low interest fees, but charge proportionately (or disproportionately) high annual fees for them. It is good practice to do the sums and determine if the fees for a card are worth the perks, and consider if those are perks you’ll even use in the first place.
- Points value. Getting a free return flight for simply signing up for a card and paying with plastic almost sounds too good to be true, and sometimes it really is. Sometimes you’re paying a high annual fee or high-interest rates for those points. Remember to do your research about rewards programs, consider the redemption options and decide if you will earn enough points for the card to be worth it when other costs are considered.
- Other features. Some credit cards offer other complimentary extras and perks. For example, if you travel frequently, you may want to look for a card that gives you complimentary travel insurance and low or 0% foreign transaction rates. Some cards offer purchase protection or extended warranties on your purchases, which might also appeal to you, while others have concierge services.
When choosing a new credit card around Christmas, make sure you compare your options carefully and consider both the promotional benefits and long-term features of each card. That way, you'll be able to find a card that works for your over the Christmas period and into the New Year.
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