Choosing a Credit Card in Australia: A Practical Guide

Choosing a credit card can feel overwhelming — especially with so many interest rates, rewards programs and fees to compare. This guide explains how to choose a credit card in Australia based on your spending habits, repayment style and goals, so you can compare options with more confidence and build your financial literacy.

We’ll break down common card types, features, interest rates and charges to watch for, along with practical steps to compare offers. If a credit card isn’t the right fit for your situation, we’ll also outline when a Credit24 personal loan may be an alternative worth considering for predictable repayments.

Apply now: https://www.credit24.com.au/au/apply/login

Understanding credit cards: Types and basics

Before learning how to choose a credit card, it helps to understand the main types and how they work.

Credit card types in Australia include:

• Low-rate cards – lower ongoing purchase interest rates.
• Low-fee cards – minimal annual or monthly fees.
• Rewards cards – earn points for spending.
• Balance transfer cards – move existing debt to a lower or 0% introductory rate (conditions usually apply).
• Premium cards – may include extras such as travel insurance or concierge services (fees are often higher).

How credit cards work

A credit card gives you a set credit limit you can borrow from and repay. If you pay the statement balance in full by the due date, you may avoid interest on purchases during the interest-free period (if offered). If you carry a balance, interest is typically charged on the unpaid amount.

Key features to understand:

• Interest rate – interest may apply when balances aren’t paid in full by the due date.
• Fees – could include annual fees, late payment fees, foreign transaction fees and other charges.
• Interest-free period – often up to around 44–55 days for purchases when you pay the statement balance in full by the due date (eligibility and exclusions can apply).
• Cash advance rates – often higher than purchase rates and may apply immediately, plus fees may apply.

Credit scores matter

Banks and lenders may use your credit report and score to assess applications. In general, a stronger credit profile may give you access to more options, but approval depends on multiple factors and varies by provider.

Internal linking opp

• Learn more about managing repayments and budgeting (Internal linking opp)
• Understanding interest, fees and loan terms (Internal linking opp)
• Building healthy credit habits over time (Internal linking opp)

How to choose a credit card

Step 1: Check your credit score

Your credit score can influence approval chances and the types of cards you may be eligible for.

How to check
You can access your credit report and, depending on the service, view your score through major credit reporting bodies such as Equifax and Experian, or via other services that provide access to bureau data.

What scores mean
Credit scores are generally used to indicate credit risk based on your credit history. Different providers may interpret the same score differently, and scoring models can vary.

Impact on card options
Premium and rewards cards may have tighter eligibility criteria. Some low-rate or low-fee cards may be more accessible, but that can depend on your income, expenses and overall credit profile.

Step 2: Define your spending habits

Understanding how you spend is key when learning how to choose the right credit card for your lifestyle.

Look at:

• Monthly spending patterns – Do you use a card for everyday purchases or only occasionally?
• Payment habits – Do you usually pay the statement balance in full, or do you sometimes carry a balance?
• Financial goals – Are you focused on minimising fees, managing interest costs, earning rewards, or consolidating existing card debt?

A simple rule of thumb: if you regularly pay in full, fees and rewards may matter more; if you sometimes carry a balance, the purchase rate and fee structure can matter more. This is general information only — your best option depends on your circumstances.

Step 3: Understand and compare card features

When you're choosing a credit card for the first time — or reviewing your existing card — compare the features below carefully.

Interest rates
Purchase rates vary widely. A lower purchase rate may help reduce interest costs if you carry a balance. Rewards and premium cards often have higher rates, which may reduce the value of perks if you don’t pay in full.

Annual fees
Fees can range from $0 to several hundred dollars per year. Consider whether the card’s benefits are likely to justify the cost for how you plan to use it.

Interest-free periods
Many cards advertise an interest-free period on purchases when you pay the statement balance in full by the due date. If you carry a balance, interest-free periods may not apply, and interest can add up quickly.

Foreign transaction fees
If you shop online with overseas retailers or travel frequently, check for international transaction fees and exchange rate margins. These costs can make purchases more expensive than expected.

Credit limits
Lenders usually set credit limits based on factors like income, expenses and credit history. A higher limit isn’t automatically better — a limit you can manage comfortably may be safer for budgeting.

Additional benefits
Benefits can include rewards points, cashback offers, travel perks and insurance. Extras can be useful, but only if you’re likely to use them and understand any exclusions, caps or conditions.

Step 4: Research and compare offers

Comparing cards properly is one of the most important steps in learning how to choose a credit card in Australia.

How to compare effectively

• Use comparison tools from providers and reputable independent sources.
• Read the Key Facts Sheet (where available) and the Product Disclosure Statement (PDS) to understand rates, fees and key conditions.
• Compare ongoing rates and fees, not just introductory promotions.
• Consider using a repayment calculator to estimate costs based on your likely balance and repayment pattern.

Red flags to watch for

• Hidden or conditional fees – “$0 fee” claims may only apply under certain conditions. Always check the fee schedule and the PDS.
• High cash advance costs – cash advances can attract higher rates and fees and may not have an interest-free period.
• Short introductory offers – a 0% period may revert to a higher ongoing rate after the promotional term ends.
• Pressure language – be cautious of marketing that implies certainty (for example, “guaranteed approval” or “no credit checks”). Responsible providers should clearly explain eligibility and checks.

Where to find reliable information

• Provider websites and official product documents (Key Facts Sheet, PDS)
• ASIC’s MoneySmart (consumer guidance)
• CHOICE (consumer advocacy and reviews)
• Credit reporting bodies (for understanding reports and disputes)

5 types of credit cards explained

Here are the main categories, with general pros and cons to help you decide.

Low rate cards:
Often useful if you sometimes carry a balance, because a lower purchase rate can reduce interest costs over time (assuming the rate stays low and you’re eligible for it).

Low fee cards:
Often suited to light or irregular users who want to keep annual costs down. These cards may have fewer extras or rewards.

Rewards cards:
Points can add value if you pay in full and use the rewards well. If you carry a balance, interest and fees may outweigh the benefit.

Balance transfer cards:
Can help some people manage existing card debt by moving it to a lower or 0% introductory rate for a period. Check the transfer fee, the revert rate, the promotional end date, and any conditions (for example, what happens if you miss a payment).

Premium cards:
May include travel perks, insurance or concierge-style extras, but typically come with higher annual fees and sometimes higher rates. Consider whether you’re likely to use the benefits and meet any eligibility criteria.

Warning signs to watch for

When comparing cards, watch for common pitfalls:

Hidden fees
These can include late payment fees, paper statement fees, foreign transaction fees and cash advance fees. Always check the fee schedule and the PDS.

Unclear terms
If an offer sounds unusually generous, read the details carefully. Key conditions — like eligibility, promotional end dates, and revert rates — should be clear and easy to find.

High interest rates
Some rewards and premium cards have higher purchase rates. If you may carry a balance, weigh perks against potential interest costs.

Excessive annual fees
A high annual fee can outweigh benefits unless you consistently use the included extras.

Restrictive conditions
For example, caps on points, limited reward categories, strict balance transfer requirements, or conditions that reduce the value of promotions.

FAQ on choosing a credit card

What is the 2/3/4 rule for credit cards?
This is an informal rule discussed in some online finance communities. It suggests spacing out applications (for example, limiting how many approvals you seek over certain timeframes) to reduce frequent credit enquiries. It’s not an official rule, and impacts vary depending on your credit profile and lender.

When choosing a credit card, what should you consider?
Common factors include the purchase rate, annual fee, interest-free period rules, rewards value, foreign transaction fees, and how you typically repay. The best choice depends on how you plan to use the card.

Is it good to have a credit card and not use it?
It depends. Keeping an account open and paying on time can support a stable credit history, but an unused card with an annual fee may not be worthwhile. Also consider security and whether you can keep track of all open accounts.

How many cards should I have?
There’s no one-size-fits-all number. Some people prefer one card to keep things simple. More cards can mean more limits and features — but also more due dates, fees and admin to manage.

Should I get a rewards card?
A rewards card can make sense if you usually pay the statement balance in full and the rewards suit your spending. If you’re likely to carry a balance, consider whether interest and fees could outweigh the rewards.

What is the best first credit card?
For many first-time cardholders, a low-fee or low-rate card can be a simpler starting point. Aim for a card with transparent fees and features you’ll actually use.

Can I get a credit card with bad credit?
It may be harder and options may be limited. Some providers offer basic products with lower limits. In some situations, other products (like a small personal loan with set repayments) may be more suitable — but it depends on your circumstances and eligibility.

Why Credit24 as an alternative to credit cards

Credit cards can be convenient for everyday spending — but they’re not always the best fit for larger costs or when you prefer repayments that are set and easier to plan around.

A Credit24 personal loan may be worth considering in situations like:

• For larger purchases over $5,000 – a personal loan has set repayments rather than a revolving balance (which can help some people plan).
• When you need longer to repay – you may be able to choose a term that fits your budget (subject to eligibility and provider terms).
• If you want predictable payments – repayments are typically fixed (or set), which can make budgeting easier.
• When comparing interest costs – depending on the product and your profile, a personal loan rate may be different from a credit card rate.
• If managing revolving credit is challenging – instalment repayments can help some people avoid ongoing debt rollover.

Credit24 provides a personal loan option with set repayments and disclosed fees and charges, which may suit customers who prefer predictability — noting that eligibility, lending criteria, fees and charges apply.

Apply now: https://www.credit24.com.au/au/apply/login

Sources

• ASIC MoneySmart – Credit cards and choosing a credit card
• ASIC MoneySmart – Credit reports and credit scores
• CHOICE – Credit card guides and comparisons
• Product Disclosure Statement (PDS) and Key Facts Sheet (KFS) from relevant card providers
• Credit reporting bodies (e.g., Equifax, Experian) – information on accessing your credit report

Disclaimer

IPF Digital Australia Pty Ltd, trading as Credit24, ABN 59 130 894 405. Australian Credit Licence 422839. The information in this article is general in nature and does not consider your objectives, financial situation, or needs. Lending criteria, fees, and charges apply. For product details, eligibility requirements, and full terms and conditions, visit www.credit24.com.au.