Today the credit card market has reached almost saturation
point in Australia. However this hasn't stopped credit card
providers from offering lucrative deals or promotional
schemes, neither has it stopped the average Australian
consumer from procuring more cards.
If you are new to the market, here is a guide to help you
compare credit cards and pick the best one for you.
Interest rates
This should be one of the first things to look out for when
shopping for credit cards. Credit card interest rates can
be unusually high and if you're not reading the fine print
you could be taken for a ride. Many financial institutions
charge 0% interest rates for a certain duration only. Hence
such credit card interest rates are more of promotional
offers. In such cases be sure to read the offer document
carefully and ask what the interest rate will be after the
promotional period.
The grace period
The grace period is usually the number of extra days the
bank gives you after the due date, to pay off your
outstanding balances. During this time no interest gets
charged to your account. Usually the grace period is from
30 to 55 days. However with the credit card market being so
competitive it would do you good to compare credit cards
and look for the one with the highest grace period.
Annual fees
Annual fees are more like service charges which banks
charge from customers in return for their offerings. Today,
however, most banks issue credit cards with no annual fees,
while some others may issue cards which have a zero annual
fee only for a specific duration. After that it goes to the
regular standard. Be sure to keep a tab on the duration.
Rewards programs
In an effort to lure more customers by the day, many
financial institutions today issue credit cards which
provide cash back, frequent flyer miles and other rewards
points. Some may help you accumulate rewards points on
purchases made on the card while others may reward you when
you use the card to purchase airline tickets etc. Thus when
you compare credit cards make sure to scrutinise this
feature as you can mostly extract a good deal owing to the
competitive industry.
Fixed and variable interest
Other than just the rate of interest on the card, usually
you'll also need to check the kind of interest on it.
Credit card interest rates usually come in two types -
fixed and variable. The fixed one, as the name suggests
will entail paying a fixed amount every month. However, the
variable one can be a little tricky as it fluctuates based
on market conditions. So if the market interest rates are
low you are one of the lucky few. However if it is on the
upside then you're in for a lump sum payment every month!
Late fees
Depending on how much you default on your payments, credit
card companies will charge a late fee. Be sure to check on
this aspect as well when you compare credit cards as a
steep late fee can mean having to pay a large amount when
you miss the payment!
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Article by Richard Greenwood, founder of finance and credit
card comparison website http://www.click4credit.com.au .
The site compares credit cards side by side from major
Australian banks such as ANZ, NAB and St.George bank.
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