Do I Need a Credit Card?

Daniel Brown

Financial ExpertUpdated on February 16, 2023

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You may want to consider joining the 40% of Australians who use credit cards. But be cautious – if you don’t pick the best credit card, swiping plastic may lead to high interest rates, long-term debt, and bad credit.  

This article includes everything you need to know about credit cards, including card types, features, fees, applications, and repayments. You’ll also get some helpful tips about proper credit card management.    

Scott Graham | Unplash

What Is a Credit Card? 

A credit card is a type of unsecured lending that provides the cardholder with access to a revolving line of credit. The person can access that line of credit through a small plastic card known as a credit card. 

A cardholder can usually make purchases until they reach a particular limit. Then they can repay the credit in part, or in full to a bank by a specified due date. 

If a person only repays the credit in part, the leftover balance is classified as extended credit. The bank will generally charge the cardholder interest on that amount until they are able to repay it.

Some cards charge interest on all transactions and purchases made from the transaction day. 

Types of Credit Cards 

In the past, credit card definitions included strict terms such as platinum, gold, and silver. 

However, different colours can still provide general information about a card’s credit limit, features, and rewards. Always read the product disclosure statement and terms and conditions (T&Cs).    

Silver and gold are usually mid-range cards that are more prestigious than a banking institution’s standard card. The more high-end cards include platinum, black, and diamond. 

Coloured Credit Cards

Silver and Gold 

These cards used to have the most rewards. Today, there’s less crossover between the cards in terms of features and prestige. 

A gold card, such as Visa Gold, often includes perks, such as complimentary insurance covers. This feature distinguishes it from silver cards. Other distinctions of the gold card from the silver card include:  

  • Higher credit limits 
  • Higher annual fees
  • Rewards program 
  • International travel insurance

Take time to understand the fine print on the features and fees of different gold and silver cards. 

Gold and Platinum

Platinum credit cards are one of the most long-lasting cards. All of Australia’s four big banks and several small banks offer them. 

Platinum cards include features and also risks such as:

  • Top-tier card after the diamond or black card 
  • Rewards credit card 
  • Benefits such as international travel insurance
  • High interest rates

Other platinum card drawbacks include high annual fees and higher minimum credit limits.  

These high-end credit cards, including the Suncorp Platinum Card, also usually include income requirements and exclusions to provide premium services.  

The bottom line is that platinum cards include high annual fees to provide many perks and benefits.

Platinum and Titanium 

Titanium credit cards often include a higher credit limit than platinum cards. This option is one of the best Australian credit cards in terms of perks and limits.  

Black and Diamond

These are the most prestigious credit cards in the market. One example is the American Express Centurion card. 

Both black and diamond cards offer great reward points and ample flexibility for redeeming them. 

To help you live the high life, titanium cards offer enticing features, such as memberships to exclusive clubs and high-end concierge service. 

Along with the premium perks, these expensive credit cards, like the Commonwealth Bank’s Diamond Awards Card, also offer sky-high annual fees. 

However, the interest rates of these wealth management tools are often similar to platinum cards. 

Difference between Visa and Mastercard

Neither Mastercard nor Visa issues credit cards or determines fees; only financial institutions, such as banks, do. 

The two companies serve as digital payment platforms that offer a more systematised way of doing transactions.

One significant variance between the two companies is the benefit programs and perks they offer. 

Another major difference is exclusivity. Some financial institutions and banks arrange just one payment platform for all cards they issue. This option could be Mastercard or Visa cards.

Features-focused Credit Cards

You have many options depending on your needs, ranging from student cards to pensioner cards. If you’re a Qantas frequent flyer you can choose a rewards card or a frequent flyer credit card.

Balance Transfer Credit Cards 

This type of card is helpful if you’ve accumulated debt on your existing credit card and want to pay it off in fewer instalments. 

It allows you to roll over current debt to a balance transfer card through a 0% interest rate.  

 This offer is only available for a set period of time. In addition, the balance transfer rate applies only to the existing debt you transfer to the card.

Low Interest Rate Credit Cards 

If you carry a balance on your credit card, then a low rate credit card could be ideal for you.

It’s perfect if you want to easily pay off a large expense, such as a big-ticket purchase or an upcoming vacation.   

Despite their benefits, these cards often don’t have perks like travel insurance.

Interest-free Credit Cards 

This card can help pay for big-ticket items sooner. A 0% interest card with a “honeymoon period” typically means you’ll get a 0% interest rate on all purchases during the introductory period.  

The honeymoon period is usually during your first year as a cardholder. 

However, when the honeymoon period is over, you’ll revert to higher interest rates.    

No Annual Fee Credit Cards 

This credit card is ideal if you don’t use plastic as a convenient payment method and aren’t looking for perks like rewards programs.   

No annual fee cards are usually no-frills options, but you also won’t get access to ultra-low interest rates. With this card type, interest won’t be a factor if you pay in full and pay on time every month.

Rewards Credit Cards

These cards provide rewards points when you spend money. They can be linked to general rewards programs that let you redeem points for items such as merchandise and gift cards.

You can also often redeem the points for frequent flyer programs like Qantas points.

The main drawback of these rewards cards is that they tend to have higher interest rates and annual fees.  

Travel Credit Cards 

These cards are tailored for overseas travel and can provide large savings on airline tickets and hotel stays.

One big perk with these cards is that you won’t have to pay a foreign exchange fee, letting you keep more money in your pocket.  

Credit Card Features

Balance Transfers – A transfer credit card pays down the balance of an existing credit card. During the introductory period of balance transfer offers, you can pay down the balance and pay either little or no interest. 

Bonus Points – After approval, you can earn 10,000 points within months, rather than years. You can then use the points however you want, like shopping online, or receiving discounts on airfares and hotel bookings.

Business Credit Cards – Features such as tools, perks, and rewards can improve your company’s cash flow. This card type includes features like spend tracking and business accounting. 

Cash Back – This provides an easier way to earn rewards than a rewards program, which requires accumulating and redeeming a lot of points. Credit card companies refund the cardholder a percentage of their spendings.

Charge Cards –  These cards are available as business and personal cards, and have no pre-set spending limit, which improves your cash flow. You can also earn spending rewards when you use them. 

Credit Unions – This is an alternative to big banks. When you switch to this option, you get benefits, such as lower interest rates and fees. You can also earn rewards and contribute to the credit union’s operation. 

Debt Consolidation – Transfer the balance of multiple cards to one card so you’ll have one balance and low, or no interest during the introductory period.   

Frequent Flyer – You can use rewards points to transfer to a frequent flyer program, like Qantas rewards. This feature is ideal for business trips and summer vacations.  

Instant Approval – Despite what the name suggests, this feature doesn’t guarantee credit card approval. What it can guarantee is an issuer’s instant decision. It’s one of the easiest credit cards to get on the market.

Low Cash Advance – With this feature you can get a low cash advance rate, which makes it quick and easy to pay off what you owe. 

No Annual Fee – These cards often focus on savings, rather than offering benefits, so you can keep more money in your pocket.

Reward Programs – You can earn points through credit card spending. Then you can redeem points for items like airline flights, hotel accommodations, and gift cards. 

Purchase Protection – This is also known as merchandise protection and purchase security insurance. It protects purchases by providing cover for lost, stolen, or damaged items. 

How Credit Cards Work

Credit cards let you borrow money from lenders such as a bank with an Australian business number (ABN). You can then use the money for cashless purchases and transactions.

  A credit card provides a revolving line of credit that includes a credit limit or a specific amount of funds you can utilise anytime.

Like debts and loans, credit cards involve repayments. Your fees are based on the type of credit card you’re applying for.

The most frequent method of credit card use is to make in-person cashless payments. This process is usually done by swiping or tapping when you’re in a shop. 

You can also use credit cards on the internet or a smartphone.

Every month you’ll receive a credit card statement that lists:

  • Transactions
  • Total amount owed
  • Minimum repayment required

The more time you take to repay your credit card, the more interest the card provider will charge.

Therefore it’s a good plan to try to pay off the biggest amount possible. Some features are designed to help with credit card payments including:

  • Auto-pay 
  • Repayment planner
  • SMS payment reminders

Where to Use Credit Cards

Just as consumers can select from different kinds of credit cards, they apply for credit cards for various reasons.

For example, people might get a credit card due to the safety that cashless payments offer, versus carrying lots of cash. 

Cardholders can also delay big payments by using smaller repayments to settle them.

You can use credit cards to get rebates for small and regular purchases or big transactions.

A new credit card may provide a bonus when you spend a particular amount. You can then use the cash back feature to make future purchases.

Other types of credit cards earn rewards points and frequent-flyer miles.  

Pros and Cons of Credit Cards

Potential Advantages 

Points and Rewards

Some new cards allow you to earn reward points and frequent flyer points. Take note that rewards cards often have an annual fee and higher interest rates.   


You can use credit cards in situations such as being short on cash right before payday. If you’re only using a credit card for emergency funds, consider ones with no annual fees. 

Interest-free Days 

This feature provides an interest-free period on your purchases. Therefore, you won’t have to pay interest if you can pay back the closing balance in full within the period. 

Remember that some kinds of transactions like cash advances at ATMs don’t include interest-free periods. 

Therefore, you must pay the interest immediately on such transactions. 

Credit Card Insurance 

Premium credit cards often include insurance on certain purchases, such as vehicle rentals and airline travel with bonus Qantas points. There’s also:

  • Price protection insurance 
  • Purchase protection insurance
  • Extended warranty insurance 

Potential Disadvantages

Credit Card Fees 

The range of fees include:

  • Annual fees
  • Late payment fees
  • Cash advance fees
  • Balance transfer fees
  • International transaction fees 

Some lenders offer cards with no annual fees, although rewards credit cards usually have higher annual fees.  

Interest Charges

Credit card companies will often charge you interest if you don’t pay the full closing balance on or before the due date. 

Therefore, you’ll have to pay interest on any outstanding purchase balance. 

Another factor is that credit card interest is typically higher than other kinds of credit. You can use perks such as 0% balance transfers but consider all long-term factors.  

Lower Credit Score 

Making late or partial credit card payments could be included in your credit report, potentially reducing your credit score. 

Payment is considered “late” if it’s done 14 days or later than the due date. 

In addition, applying for multiple credit cards in a short period can reduce your credit score. Lending companies might flag you as a high-risk borrower. 

How to Apply for a Credit Card 

Suppose you want to apply for a credit card through providers with an Australian credit licence. You’ll have to take these steps:

Step 1 – Evaluate your current financial situation. This analysis includes your credit score and an honest assessment of whether you have bad credit or not. 

Step 2 – Find a credit card that meets your financial needs.

Step 3 – Start the application process.

Step 4 – Show you’re eligible to apply. 

Step 5 – Supply all personal identity information.

Step 6 – Provide all required financial information.

Step 7 – Complete your ID check. 

Step 8 – Think about other essential details and measures such as restricting spending through a lower credit limit and adding additional cardholders. 

Step 9  – Wait for the credit card company to approve your application. 

Credit Card Application Rejections 

After credit card providers process credit card applications within a set number of business days, they accept some applicants but often reject most. These institutions include: 
  • Westpac
  • National Australia Bank (NAB) 
  • Australia New Zealand Banking Group (ANZ) 
  • Citibank

Several factors may have caused the rejection of the application including:  

  • Earnings
  • Job stability
  • Credit history 
  • Expenses

These areas could be reasons for rejection. Other basic issues might also be the cause, including not meeting the following requirements:

  • Being an Australian citizen or permanent resident
  • Being at or above the minimum age limit
  • Meeting the card’s minimum income requirement 

A credit card provider might also reject your application if you’ve applied for too many credit cards within a short period of time. This action could be a sign that you have financial problems. 

If you want to maximise your chances for approval, first check to make sure you meet all the application requirements. 

Additionally, only apply for credit cards you intend to use.

Take note that a simple mistake like entering wrong information could cause the card provider to consider it grounds for rejection. 

One example is an incorrectly-entered driver’s licence number since it makes it difficult to verify your identity.

Before submitting your application, always read through the document first. Double-check all entered information to make sure it’s correct.

What to Do if You’ve Been Declined

If a credit card provider rejects your credit card application, it’s not a good idea to apply quickly for another credit card. 

Taking that step could add a new black mark to your credit record. That’s because all credit card rejections appear on the report.

Step: 1: Contact a Credit Bureau

Ask for a copy of your credit report from the credit bureau. This document will show ways to improve your credit rating and share possible mistakes that caused your application to be rejected.

Step 2: Make a Plan to Improve Your Credit Rating 

You might need to take this step. It’s possible to use debt consolidation through loans and cards. This process will help you pay off debt faster.

If you see an error in your report, try to fix it by contacting the credit agency.   

Step 3: Review Your Monthly Expenses

Check if you can cut any big expenses. Create a simple budget list to reduce your daily spending.

Step 4: Apply for Another Credit Card

Take this step after some time has passed and you’ve fixed some of the problems mentioned above. 

Just because a provider declined your application, it doesn’t necessarily mean the same outcome will happen with other companies.

Credit History and Credit Score

Credit Limit

A card’s credit limit is the amount of money a lender will allow you to borrow. Online lenders and banks calculate your credit limit based on various factors including:

  • Income
  • Living expenses
  • Financial commitments

How Credit Card Providers Determine Credit Limits

Credit card companies such as banks calculate a cardholder’s credit limit based on their ability to repay the credit.

Lenders must evaluate a person’s credit history and credit score to determine if the potential cardholder is likely to make the repayments.  

A person must prove their creditworthiness through measures such as employment status, annual or monthly income, and credit rating.     

If you have a high credit score and annual income, you’ll likely receive low interest rates and a high credit limit.

Meanwhile, card providers are less likely to approve the credit card application of people who have a below-average or even average income and credit scores.

Increasing Your Credit Limit

Similarly to applying for a credit card, if you want a card provider to approve a credit limit increase, you must meet the lender’s eligibility criteria.  

Make sure your credit card has a good repayment history. Additionally, ensure you make repayments on time. You can even pay off credit card balances early.  

Only seek credit advice from financial advisers with an Australian Financial Services Licence (AFSL).  

What Costs Are Connected to Credit Cards?

Annual Fees – credit card companies charge this fee to keep the card active and open. Card providers automatically charge high and low annual fees to your account. 

Interest Rates – companies charge this fee whenever you borrow money. They usually charge interest directly to credit card accounts on all purchases.

Late Fees – companies charge late fees when you don’t make the minimum repayment on your due date, or if the amount you paid is below the minimum amount due.  

Foreign Transaction Fees – some card providers charge this fee when you make card transactions in another country. Look for low fees since this cost is in addition to a credit card’s exchange rate.  

Overdue Fees – this fee is charged every time an account isn’t up-to-date on a particular day of the month.

Monthly Fees – this fee is sometimes charged when the balance is above a certain threshold.

Late Payment Fee – a card provider will charge this fee if you don’t pay the agreed minimum repayment amount. It charges this fee If you don’t pay by the due date.

Credit Card Fees

When applying for a credit card, it’s important to know which fees to watch for. Payments that could cost you large sums include the following: 

Annual Fee

A bank or other financial institution might charge you this fee every year for using a credit card. 

If you’re paying a high annual fee, then make sure it’s worth the money. Go with credit cards that have perks such as:

  • General rewards points from eligible purchases
  • Executive airport lounge access
  • Apple Pay
  • Google Pay 
  • Samsung Pay 

There are instances when it’s more practical to look for a card with no annual fees. These cases include when you’re looking for a basic card, and you pay your credit card bill in full and on time for every statement period.

Cash Advance Fee

It’s a significant money drain to withdraw cash using your credit card. The card provider will charge you the cash withdrawal fee, which is a percentage of the withdrawn money.

Cash advances can help with covering costs, such as home loan repayments. However, you’ll also have to pay a cash advance rate that can be ultra-high. 

A third issue to consider is that cash advances are inapplicable in terms of interest-free periods. 

The card provider, such as a proprietary limited (pty ltd) company, will charge interest. Coverage of the interest rates begins from the day of the cash advance until the day you pay off the balance.  

Overseas Currency Conversion Fee 

If you travel a lot, then a standard credit card could cause your overseas travel bills to skyrocket. 

Each time you use your credit card, you might get charged with expensive foreign exchange or currency conversion fees.  

The solution is to find a credit card that has a low foreign currency conversion fee, or none at all. 

Late Payment Fee

Think of this scenario: it’s the day after your credit card due date, and you haven’t paid the balance. The provider might charge you a late payment fee, which will be in addition to the interest you have to pay. 

One way to work around this is to use automatic repayments so you’ll never miss another due date. 

Is a Personal Loan or Credit Card Better?

It’s important to know the advantages and disadvantages of both a credit card and a personal loan. These pros and cons are mainly based on the kind of borrower you are. 

Credit Card Pros 

  • Flexibility to pay as you wish
  • Option to earn points through a rewards program 
  • Possible honeymoon period with an interest-free introductory offer or interest-free days

Credit Card Cons

  • Annual fees can be very high
  • Credit card interest rate is standard
  • No payment plan enforced
  • Minimum monthly repayments required 

Personal Loan Pros 

  • Lower rates through good credit scores 
  • Consistent repayments through additional contributions 
  • Set borrowing amount

Personal Loan Cons

  • May incur application, early repayment, or ongoing service fees
  • Set repayments might be challenging to pay back
  • Might have high application and upfront costs
  • Little flexibility to pay down debt 

How Do I Compare Credit Card Deals?

If you’re ready to start comparing credit card deals, you can use various online tools, such as comparison tables.

These tools allow you to search for your favourite features, including rewards points, 0% balance transfer, or low interest rates.

After you’ve found a card that offers a great deal for the features you want, the next step is to check the features of your other card options. 

Make sure you won’t be charged high annual fees or purchase rates.  

You can also use a credit card search tool that provides a personalised search result.

To learn how much you could save by finding a cheaper credit card, you could use an online calculator, which is another comparison tool. 

Tips for Managing Your Credit Card

Minimise Credit Card Fees 

Credit cards are bundled with different fees. It’s important to know the main ones and how you can avoid or minimise them. 

Try to avoid credit card fees by paying your balance on time. Set a reminder before your due date to ensure you won’t forget.

Meanwhile, if you can’t pay the full credit card balance, then try to pay over the minimum to prevent the interest from building up.

Use a Payment Plan 

If you’re making a large credit card purchase, you can break it down into monthly installments over a set term. This step makes credit card repayments easier.

Protect Your PINs and Passwords

Here are practical ways to ensure your credit card’s security:

  • Don’t tell anyone your passwords, even friends and family
  • Don’t allow anyone to see you enter your passwords, including mobile and online banking codes
  • Only provide account details online, including codes, when requested
  • Don’t pick codes that people could guess easily (e.g. your birthday)
  • Memorise your codes and ignore emails and messages suggesting new ones
  • Watch out for calls or SMS that ask for account details
  • Don’t write down codes– keep them stored in your devices
  • Contact your card provider immediately about suspected fraud and disputed charges
  • Credit card providers often have a domestic and international hotline you can call if you have an urgent security issue– if your card is lost or stolen, request that the card be blocked immediately.

Keep Your Card Safe

This step is one of the most important ways to manage a credit card:

  • Don’t leave your cards lying around in public places like a café or bar
  • When cards expire, cut them up and dispose of them
  • After every transaction, take all cards, cash, and receipts with you
  • Never allow anyone else to use your credit card 
  • Set up automatic payments

You can have bills and other regular payments automatically debited from your credit card. This process could be for a fixed or variable amount.


1. Do I need a credit card?

Credit cards provide various advantages and disadvantages for Australians. They offer perks like rewards programs and frequent flyer miles. However, they can also be expensive if you don’t make repayments on time. 

Credit cards can be useful if you can avoid major credit card debt.

2. What’s the difference between a credit card and a debit card? 

Banks and other providers offer credit cards with a line of credit. Meanwhile, debit cards deduct funds from your bank account directly. 

Credit cards generally offer more fraud protection compared to debit cards. 

3. How much of my balance should I pay off every month?   

Ideally, you should pay off your credit card bill in full every month. If you’re unable to do that, make sure to pay more than the minimum amount due, to avoid paying higher interest. 

Some cards offer an interest-free period that provides you with more time to pay the full balance.

4. Should I consider having multiple credit cards?

This option offers various pros and cons. Advantages include earning more reward points and having an extra card for emergencies. 

The disadvantages include a higher risk of overspending and dealing with multiple charges. 

5. How can I get a free credit card?

All credit cards have some sort of cost, including repayment costs. However, you can often find cards with features such as no annual fees, 0% interest on purchases during the introductory period, or interest-free periods.  

You can also save money by paying your full credit card balance monthly.

6. Am I required to have a credit card to get a loan?

This step isn’t a requirement, but you must have an excellent credit history to get a loan. This history helps a lender check your “creditworthiness,” which is your ability to pay off loans. 

Good credit history from a credit card can increase your chances of loan approval. 

7. Can I store my credit card on my phone? 

One way to avoid a lost or stolen credit card is to store the card digitally in your phone instead of using plastic. 

This way you won’t lose your card, even if you lose your wallet. You can also alert your credit card provider to suspend or cancel your card if it gets lost or stolen.

8. What kind of interest rates do credit card providers advertise?

Credit card providers use different rates for various kinds of transactions. They include regular purchases, cash advances, and balance transfers. 

Companies usually advertise the purchase interest rate. A card provider charges you this rate if you don’t pay your balance in full by the due date.

The right credit card can help you cover daily expenses and pay bills before payday or help you to deal with emergencies. The first step is learning about the best credit card deals available today. 

Need any assistance with finding the right credit card for your financial and lifestyle needs?

If you feel overwhelmed by a tidal wave of options and don’t know where to start, you can reach out to your MMS Money Mentor to help get your money sorted.
Manage your money better by having a quick chat with your MMS Money Mentor today!


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1. Overview of the Australian credit card market 


2. Credit card definition 


3. Credit cards


4. Credit card balance transfers


5. Repayment history and defaults



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