This guide has been written to inform you about getting the right credit card to suite your personal needs. There are hundreds of types of cards it is imperative you select the correct card. Selecting the correct card could save you hundreds of dollars in the long run or give you rewards such as free travel, appliances and other benefits.
What is a credit Card?
It is a plastic card with a magnetic strip, issued by a bank or financial institution to a customer to buy goods and or services on credit. Also called a charge card. Credit is money given to a customer to borrow over an extended period of time. Banks and financial institutions make money by charging an interest on money lent to the customer. Generally credit cards charge a high interest rate this is because a credit card is designed for small purchase for short periods of time.
What are the major banks in Australia?
Australia has four major banks with triple A (AAA) credit rating. This is the highest level of credit rating a bank or financial institution can achieve. The 4 major banks for Australia are:
- Commonwealth Bank
- St. George Bank
- Westpac Bank
- ANZ Bank
These banks are always recommend for borrowing money because they are most secure and regulated. However they don’t always provide the cheapest line of credit available. Sometimes smaller banks and financial institutions card offer cheaper credit and a better deal with better customer service. Remember to research all small banks and financial institutions, read the fine print on there contacts.
What credit card suits me best?
There are many types of credit cards on the market today, the shear amount of credit cards can make picking your credit card a difficult decision, and so we have divided all the credit cards on the market into 6 categories.
A balance transfer credit card is great for when you currently have a debit on another credit card (generally over AUD $5000) and you would like to swap it onto your new credit card with a new bank or financial institution for a lower interest rate. You will be given the option depending on the credit card for 6 months 12 months or lifetime interest rate, The lower the time the better the savings. Essentially you can move from card to card taking the lowest 6 month interest rate.
Debit Card (pre-paid)
A debit card is essentially a pre-paid credit card. This kind of card is great for customers who wish not to have credit access. Most Customers who use this card generally purchase items online, because this card works exactly the same as a credit card bar the fact you must put money into the card before you can purchase your good or service.
A frequent flyers card is for customers who wish to get point for purchases and transfer these point into rewards such as free plane flights to locations depending on how many points you receive will translate to how far you can go. To gain points you must purchase items. The average points per dollar is 3 points to 1 dollar.
Low interest cards are for customers who whish to keep debit on there credit cards for extended periods of time, ergo if you wish not to pay off your debit and just paid the interest then this is the credit card you would use.
No Annual Fee
No annual fee cards are for customers who do not use there credit cards frequently.
Rewards Cards are for customers who frequently use their card for all or most purchases, for frequently using your card your bank will reward you with points, at the end of the year or specified time line you can trade your points for goods and sometimes services. The catch on these cards is that if you don’t use your point within the allocated timeline you will lose your points.
Information for Application?
What are does the law require you to be to get a credit card?
- You must: Be 18 years of age or older.
- You must meet your banks credit rating requirements
- You must be an Australian citizen, permanent resident or have a current Australian visitors visa
- You will need to prove your gross annual income on paper
- Your employer’s details (name and address)
- Details of your own home if you have one (estimated value, amount owing on the property)
- Details of any existing loans (investment property loans, personal loans, leasing, credit and store cards)
- Any savings, investments and cheque account details (account numbers and balances)
- Asset or investment details (value of property, shares, car, furniture and other assets)
Are you a new Bank customer? If you’re a new Bank customer, you will need to go to your bank branch and provide personal identification, along with the two most recent original pay-slips for the primary applicant. Personal Identification documents include one of the following documents containing your photo: Passport
- Australian Drivers / Firearms licence
- Proof of Age card
- Or two different documents from this list: Birth Certificate
- Citizenship Papers
- Pension Card
How to increase your chances of Approval
To help increase your chances of getting approval on a credit card. Run a credit history check on your self. Visit the Veda Advantage, Dun and Bradstreet, and Tasmanian Collection Service, these website will give you a detailed report on your credit, these website can take up to 10 working days to provide you your report.
- Read though your credit report and check it for inaccuracies and other data which is incorrect. Resubmit it.
- Your credit report is just one factor a credit provider may take into account when assessing your application for a loan. Other factors may include your employment, your income, your savings and any existing liabilities.
- It is recommended that when you apply for a credit card that you have been working for a minimum of 12 months at the same company.
- Make sure your bank account show that you have money in it and that you keep money in it (save). This will show the bank or financial institution that you have the ability to repay your credit debit.
- Bankruptcy in most cases will hamper your efforts in finding credit. If you have been bankrupt you may need to see a professional about fixing your credit.
- Other liabilities such as mortgage personal loans and car loans can be a factor when the banks review your credit card application. Be sure you can make repayments on all your liabilities comfortably.
If you have been rejected for a credit card application you can always resubmit your application in 6 months (or less in some cases), contact your selected bank and discuses why you were declined. Once you know why you were not approved you can seek to correct your situation and then resubmit.