Different types of credit cards are available in the Australian market based on balance limits, transfer facilities, rate of interest, rewards, and offers proposed by the services provider or company. Since a credit card plays a vital role in managing your personal finance and the market is flooded with numerous credit card options, you should thoroughly research before selecting the card that fits your needs. Together with regular Standard Credit Cards, there are different credit cards for different purposes. For instance, travel credit cards for travelling, business credit cards for business-related expenditures, and a student credit card for students' needs.
Types of Credit Cards in Australia
Among the wide variety of credit card options available, you can always choose the one that suits you the most. However, being a prudent consumer, you should consider your lifestyle requirements, buying habits, and capacity to repay the debt amount while deciding on the type of card you need to go with. Though there are several types of credit cards available, listed here are some commonly used Australian credit cards, depending upon different criteria, to assist you in choosing the right one for yourself.
Low-Interest Credit Cards
As the name suggests, low-interest rate credit cards generally charge a low rate of interest on your purchases and balance transfers. These types of cards are also known as low-rate credit cards or ‘no frills’ because, besides low purchase rates, most of them have annual charges with a constraint on withdrawing cash.
- Suitable For: People who often carry a balance on their card and find it hard to repay their entire due in one go often choose this card. Thus, they are mainly designed to manage repayments more effortlessly and serve interest-free days.
- Keep in mind: Though you will minimize interest charges here but unlike those premium cards, they usually do not provide perks, discounts, and bonuses or carry any rewards programs.
Rewards Credit Cards
Considering a rewards credit card? If you're financially responsible and can effectively manage your money, a rewards credit card can be a good option. It offers you perks, bonuses, store scores, and reward points in lieu of your spending.
- Suitable For: Since these cards operate on a points system, they are ideal for frequent spenders, offering rewards like point offers, travel benefits, etc. on their purchases.
- Such cards enable you to accumulate your reward points and redeem them for a variety of compensations such as cash back, retail discounts, travel benefits, complimentary insurance, and multiple other retail vouchers.
- Keep in mind: Rewards credit cards may bear higher interest rates or annual charges as compared to standard cards.
Balance Transfer Credit Cards
A balance transfer credit card is designed to consolidate high-interest credit card debt at a lower rate, making repayment more manageable.
- How It Works: You can transfer your existing balance to the new card, often with a lower or 0% interest rate during an introductory period.
- Suitable For: Ideal for those with high-interest debt looking to pay it off at a lower rate. These cards typically have balance transfer fees, annual charges, and upfront costs, but these can sometimes be waived with promotional offers or coupon codes.
- Keep in mind: After the introductory period, the interest rate reverts to the standard rate, which can be higher than usual.
Business Credit Cards
As inferred by the title, a business credit card or business expense card relates to the expense management of your business operations and not personal finance.
- Suitable For: Being obvious, it is typically issued to a company, business, or corporate entity. If you frequently swipe your card for work-related expenses, then it is worth considering having a Business Credit Card. They may serve you with some amazing business rewards on your spend.
- Benefits: Unlike a personal credit card, it generally holds a higher credit limit along with some business-centric features, like accounting and expense tracking tools.
- Such cards tend to be extremely beneficial for small business owners, corporate employees, sole traders, and even freelancers.
- A business credit card is designed to manage everyday cash flow while presenting rewards on business purchases.
- Types: There are mainly two types of business cards in Australia, business credit cards and business charge cards. The key difference between the two is that the latter has no interest charges but binds the holder to clear the payment of every statement in full without any carrying forwards.
Premium Credit Cards
Premium credit cards are high-end credit cards that arrive with premium perks and facilities.
- Suitable For: Individuals who hold high-income sources and prefer luxury goods and services in their living opt for these cards.
- These cards typically facilitate higher spending by awarding an improved rate of earnings. For instance, you may earn more points on your per dollar spend in comparison to a regular credit card. This way you will accumulate these premium rewards and bonus points at a faster pace and can use them at your will.
- Premium credit cards offer comprehensive outsize benefits like more credits, concierge services, VIP treatment, and luxury travel perks to their holders.
- Keep in Mind: While they serve higher credit limits, they also charge notably high annual fees. Some premium credit cards, such as Black cards and metal cards, come with a wider credit limit and even higher annual charges.
Check Credit Card tips for beginners
Student Credit Cards
Student life is already an everyday task and money matters make it a little tougher to deal with. Particularly while studying full-time in a new city and managing things on your own, you often end up with tight budgets. Here comes a student credit card in the picture to help you with your day-to-day expenses.
- Suitable For: These cards are designed for individuals with limited income, such as school or university students. They are aimed at young consumers with little to no credit history, making them ideal as entry-level or starter credit cards.
- Besides helping build credit, these student cards carry a simple approval process followed by low interest rates and lower annual fees.
- Keep in Mind: The shortcoming here is that they provide low credit limits with no rewards in general.
Travel Credit Cards
As the name states, a travel credit card is typically tailored to meet the needs of both regular and occasional travellers. It offers you travel rewards and benefits on your personal as well as professional travel.
- Suitable For: It is ideal only for people who often need to travel. If you are not a frequent traveller, it may not be worth enough to pay higher interest rates and annual fees for this card.
- Benefits: Such cards can be highly beneficial during international trips since most of them offer exceptional features like no foreign transaction fees and no/low currency conversion charges.
- Furthermore, people usually misinterpret them as frequent flyer credit cards, but both are quite different.
- A frequent flyer credit card is specifically geared towards a particular airline rewards or loyalty program. You can only redeem the earned points and rewards of your frequent flyer account for flights, lounges, and other air travel-related activities falling under that respective program.
- Additional Perks: On the contrary, travel reward cards encourage you to earn points on your commute and facilitate you to make the most out of every mile you jaunt. Besides travel insurance, if you want to avail additional travel perks like upgrades, travel credits, ticket discounts, hotel bookings and airport lounge access, opt for one today.
Secured Credit Cards
Secured Credit Cards are ideal for individuals who are new to the credit world and looking to build or rebuild their financial history on their own. As a result, these cards are renowned as credit-building cards.
- A secured credit card mandates the applicant to furnish a security deposit to be used as collateral for the card which is why it’s often referred to as a deposit-based credit card.
- Suitable For: If you have a lack of credit history or carry poor credit check, then you can choose to go with a secured credit card for your desired purpose.
- Benefits: Together with serving credit-building benefits, this card also carries the potential to upgrade to unsecured credit cards provided responsible management and on-time payments.
- Owing to the prerequisite necessity of a security deposit, it is relatively easy to qualify for secured credit cards in comparison to regular unsecured cards.
Please Note: Secured Credit Cards are a feasible option for building your credit history although they aren't presently accessible in Australia.
Know Major Credit Card Terms
Find Yourself the Right Credit Card
Eventually, a suitable credit card and its benefits can be concluded based on your specific needs and financial conditions. So, in order to come up with a suitable credit card, it is advisable to first know your needs well and then make a choice accordingly. When you thoroughly analyze all the available options in the market and compare credit cards on different grounds, you are more likely to find the right credit card to meet your everyday and special requirements. Hope this guide helps.
