How to compare credit card bonuses 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 to 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.

What perks do you want from
a credit card this Christmas?

Compare credit cards with 0% purchase interest rate offers

If your spending usually skyrockets in the lead up to Christmas, a card that offers 0% p.a. interest on purchases for an introductory period could help you save on interest charges. The interest-free period offered typically lasts from 3 to 15 months with this type of credit card offer, which could give yourself more breathing room to pay off your Christmas spending with no interest.

At the end of the introductory period, the standard purchase rate will apply to any remaining debt. This rate is usually between 13% p.a. and 22% p.a, so it’s worth checking the ongoing features of when you compare 0% purchase rate cards. These cards often charge annual fees, so factor this in when comparing your options.

If you want a long-term low interest option, you can also compare credit cards with ongoing low purchase rates to keep your interest repayments to a minimum. These cards generally have interest rates between 8.99% and 15%, which is low compared to most standard purchase rates.

Compare rewards credit cards with bonus points offers

If you want to earn reward or frequent flyer points for your Christmas spending, you could get a big boost by choosing a card that also has thousands of bonus points up for grabs. Bonus points can range between 20,000 and 120,000 points.

You usually have to meet a spend requirement (such as $3,000 in the first 90 days) to get the bonus points. With typical holiday expenses including gifts, travel and food, you should have no trouble finding a card with a bonus points deal that aligns with your budget.

These cards are usually linked to a frequent flyer program (such as Qantas or Virgin Australia’s Velocity) or a bank rewards program (such as American Express Membership Rewards or Citi Rewards). You can then redeem your points for flights and other travel, cashback, gift cards, merchandise and more.

You’ll also continue to earn points for every dollar you spend, but specific earn rates will vary between cards. You can also look out for extra features including airport lounge passes, travel credits or flight vouchers, complimentary insurance and concierge services in order to get more value from your card.

These cards usually charge higher annual fees and purchase interest rates than no frills cards, so they’re best suited to cardholders who plan to pay their balance in full each month. Otherwise the cost of interest can quickly outweigh the perks of the points.

Compare credit cards with cashback offers

If you prefer cash over points, you could look at credit cards that offer cashback. Similar to bonus point offers, you’ll usually receive the cashback once you’ve met a specific spend requirement.

If you’re paying with plastic over Christmas, this cashback could help you manage your account balance. But many of these cards also come with annual fees and high interest rates, so they’re designed to reward cardholders who spend frequently but pay their balance in full each statement period.

What should I consider 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’s 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.

What about post-Christmas debt?

If you're worried about how you'll manage your credit card purchases once the Christmas decorations are packed away, you could consider a 0% balance transfer credit card. You can move your debt (or consolidate multiple debts) onto a card that offers no interest for a promotional period. These interest-free periods can last from 12 to 25 months, giving you time to pay off your existing debt and save money.

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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