Credit Cards Australia, What You Should Know About Debt

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There are various types of credit cards available on the market but not all work the same way. Some are for budget-conscious spenders, others for reward seekers.

Is it good or bad to have a credit card?

It depends on how you spend your money and how pay your debts.

If you are money savvy, credit cards are excellent to help manage your funds and get them to work harder for you.


Use them as a payment tool, don't withdraw cash, take advantage of the interest free period, if you get one, and avoid paying interest.

For those who are less organised with their finances and accumulate debt, a credit card is not recommended, but you may need it to make emergency payments, or to purchase online, or simply to feel that you have covered all your needs.

various cards

Credit Cards Australia - Let's See How They Work

Usually credit cards, Visa and Mastercard, have:

  • an annual fee,
  • a limit up to which you can spend,
  • a rather high interest rate,
  • interest free days, in some cases.

They come in all forms and shapes and the features are so different that you need to compare everything to make sure you get the best deal that matches your spending style:

  • annual fees can vary and sometimes can be waived,
  • interest rates can be higher or lower,
  • interest rates can vary whether you purchase goods or withdraw cash,
  • some credit cards have great introductory interest rates that become much higher after the promotional period,
  • they can have rewards and loyalty points or not,
  • they can have additional benefits such as insurance for travel or goods purchased.

From a bank's perspective you are an excellent client if you pay only the minimum amount shown on your statement every month. This means it will take you a long time to pay off your debt. Many years if you borrowed in the thousands. And all the interest will just show nicely on the bank's results.

From your perspective, paying only what your statement asks for is heading for trouble. Whatever you bought on credit will end up costing you much more than if you paid in cash.

Credit cards are helpful when you make purchases. They are hurtful when you withdraw cash.

With purchases you may have a number of days during which you don't pay interest. With cash you pay interest from the second you line up your pockets with the money you took from the ATM.

Banks would love you to access your money via cash advances. But you should know better.

Credit Cards Australia - How To Apply

documents to apply for a credit card

Each bank can have their own requirements. Here are some tips:

  • You must be over 18 years old
  • You must live in Australia
  • Provide 100 points identification. This means you need to come up with documents such as your passport or birth certificate and your driver's licence. If you don't drive, a Medicare card and a utility bill that shows your name and address can replace the driving licence. Ask your bank what other documents you could use to prove your identity.
  • You must demonstrate that you will be able to pay the debt by being employed or having enough income.

The banks have access to your credit history so it better be good. This means you should have paid all your debts when they were due and did not have financial issues in the past. This should make the approval process faster.

Click on the images below to learn more about money and credit.

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