If you're planning to use a credit card this holiday season, you can 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.
Compare credit cards with 0% purchase interest rate offers
Rates last updated August 24th, 2019
If your spending is about to skyrocket in the lead up to Christmas, you can reduce your interest payments with a card that offers 0% p.a. interest on purchases for an introductory period. Depending on the card, the interest-free period can usually last from 3 to 15 months. You can use these cards to give yourself more breathing room to pay off your Christmas spending with no interest, which could save you hundreds or thousands of dollars.
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.
How much can I save with a 0% purchase rate credit card?
How much you’ll save will depend on the length of the introductory 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 purchase interest rate of 17% p.a. Note that this example does not include any card annual fees or other charges.
Compare rewards credit cards with bonus points offers
Rates last updated August 24th, 2019
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.
How much value can I get from a frequent flyer credit card?
While there is no fixed dollar value for reward points, frequent flyer cards and sign-up bonuses can provide hundreds or thousands of dollars worth of value. For example, the NAB Qantas Rewards Signature credit card currently offers 120,000 bonus Qantas Points when you spend $3,000 on eligible transactions in the first 90 days. This card charges a reduced $295 annual fee in the first year (reverting to $395 p.a. after that).
At finder, we’ve calculated that 1,000 points should give you around $20 of value. So based on this calculation as well as the NAB Qantas Rewards Signature’s maximum earn rate of 1 point per $1 spent, the average amount Australian credit cardholders spend on purchases per year ($19,406) and factoring in the first-year annual fee, you’ll get $1,904 additional value from the card. With 120,000 Qantas Points, you could fly return in economy from Sydney to San Francisco or one way in first class to Hong Kong (just to give you a few ideas).
Compare credit cards with cashback offers
Rates last updated August 24th, 2019
If you prefer cash over points, you can treat yourself as you spend with a cashback credit card. Similar to rewards cards, you’ll usually receive the cashback once you’ve met a specific spend requirement.
If you’re paying with plastic over Christmas, the cashback could come in handy whether you want to use it to pay off your account or treat yourself. 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.
For example, the Citi Simplicity Card currently offers 5% cashback on eligible purchases (capped at $50 per month) for the first 90 days from approval, which could be rewarding as your spending increases ahead of Christmas. This card also has $0 annual fee.
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.
You can see our guide to managing your Christmas credit card debt for more tips.
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:
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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.
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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.
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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.
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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.
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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.
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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.
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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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Sally McMullen is Finder's credit cards and frequent flyer editor by day and a music maven by night. Her byline can be spotted on Yahoo Finance, Dynamic Business, Financy and Mamamia as well as Music Feeds and Rolling Stone.
Credit Cards Comparison
Rates last updated August 24th, 2019
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