Credit cards can be a useful addition to your wallet, giving you funds to buy what you need and repay it over time. They're also very popular in Australia, with around 13.47 million cards in circulation. That's equivalent to half the population having a credit card.
But credit cards also come with potential costs, including interest charges and annual fees. So if you're thinking about getting your first credit card, here's what you need to know.
Best first time credit cards
Credit cards with low rates and fees are suited to first-time cardholders because they help keep costs down as you get familiar with all the features. Cards with low limits and minimum income requirements can also increase your chance of approval.
So to help you start your comparison, we've picked 4 credit cards with popular features for beginners.
The Westpac Low Rate Credit Card has a low 13.74% p.a. interest rate for purchases, especially considering the average rate is around 20%.
It also offers an interest-free period on purchases when you pay the total monthly payment balance listed on each statement by the due date, referred to as "up to 55 days interest-free".
Has a low minimum credit limit of $500 and a $30,000 minimum income requirement.
It also offers up to 55 days interest-free on purchases when you pay the total amount listed on each monthly statement, giving you a way to use it with no interest charges.
Gives you access to Amex Offers, which can include pre-sale tickets and shopping promotions, as well as complimentary insurance options for purchases and refunds on eligible items bought with the card.
Rewards credit card - Coles No Annual Fee Mastercard
What we like about it:
The Coles No Annual Fee Mastercard has no annual fee ever and earns an equivalent to 0.5 Flybuys points for every $1 of eligible spending anywhere – a rare combination for a credit card.
Right now, it also offers 20,000 bonus Flybuys points (worth $100 Flybuys Dollars) when you spend $3,000 on eligible purchases in the first 90 days from card approval.
You'll also get 0% interest on purchases for the first 6 months, with a 19.99% p.a. interest rate after that.
No interest flat-fee credit card - NAB StraightUp Card
What we like about it:
The NAB StraightUp Card doesn't charge any interest but has a flat monthly fee when you use it. So it's similar to some buy now pay later accounts, with the benefit of helping you build good credit history as you get used to having a card.
It has fixed minimum monthly repayments based on your credit limit. For example, a $1,000 credit limit has a $35 minimum monthly repayment.
It also has no international transaction fees when you go overseas or shop online.
If you don't owe anything on the card and don't use it for a whole statement period, you won't have to pay a monthly fee.
Annual fee and purchase rate
A $10 monthly fee applies for a $1,000 limit, a $15 monthly fee applies for a $2,000 limit and a $20 monthly fee applies for a $3,000 limit.
To determine Finder's pick of first credit cards, we examine over 250 cards in our database. We narrow it down to cards with annual fees under $100 and minimum credit limits under $3,000. We also consider whether or not the cards are available through Finder. The other key factors we consider are:
The interest rate for purchases
The terms for interest-free days on purchases
The interest rate for purchases
Rewards or other features
In addition to the key factors, we may consider any additional features or introductory offers that are relevant and have the potential to offer further value.
Keep in mind: Our top picks may not always be best for you. Based on your situation, you may find certain features to be more or less important, so compare your options before you apply.
Pros and cons of getting your first credit card
Pros
Financial flexibility. A credit card gives you a way to buy what you need, then repay it over time. This can help if you have a lot of purchases in a short amount of time, unexpected costs between paydays, or something else.
Establish credit history. If you've never had a credit card or loan in your name, a credit card can help establish your history. And when you repay it on time, it helps build up a good credit score that can help you get access to better credit cards and loans.
Additional features. Even entry-level credit cards may offer extras such as complimentary insurance for purchases, rewards and fraud protection.
Cons
Temptation to spend. Having access to extra funds can make it tempting to make purchases you wouldn't normally be able to afford, which increases the risk of debt. If your first card also earns rewards, the incentive to spend more could be even greater (and riskier).
Interest charges. Credit card interest rates range from around 8% to 27% for purchases. So unless you can make use of an interest-free purchase period, the cost can really add up.
Account fees. While there are some credit cards that have no annual fees ever, a lot charge account fees that can add anything from $25 to $450 or more to the cost. It's important to weigh this cost against your reasons for wanting a credit card to decide if it's worth it.
How to choose your first credit card
Your first credit card should have low costs that help you avoid debt when you're getting used to it. Ideally, it should also include features that you want.
With that in mind, here are some key features to consider when comparing credit cards as a first-timer.
Interest rates
The purchase rate is the interest rate that applies to most of the things you'll pay for with a credit card.
A low purchase rate (between 8% and 15%) is ideal when you're starting out with a credit card, as it helps keep potential interest costs down. Especially when some cards have rates around 27% for purchases.
💡Tip: If you want a card with a higher interest rate, plan to pay it off as you go or by the due date on each statement. That usually means you'll qualify for interest-free days on purchases.
The cash advance rate is charged when you use a credit card to withdraw cash from an ATM, pay for gambling or other cash advance transactions. It can be almost 30% on some credit cards, so avoid cash advances as much as possible when you get your first card.
Annual fees
Getting a low or no annual fee on your first credit card means you can test it out without paying a huge amount for the account.
With credit card annual fees ranging from $0 to $1,450 (or higher for business cards), focusing on cards with annual fees under $100 can be a good place to start.
Credit limits
A low credit limit is easier to manage and helps you avoid debt. So, credit cards with minimum credit limits of around $500 to $3,000 can be a good place to start.
Just keep in mind that the credit card company determines the actual credit limit you're offered (based on your application). But you can request the minimum credit limit, either when you apply or after you get approved.
Eligibility criteria
Every credit card has a set of requirements you need to meet before you can apply, which usually covers:
Income. You need to have a regular source of income, which can include employment, self-employment or pension payments depending on the card. Some cards also have minimum income requirements (e.g. $50,000 per year).
Australian residency status. Most credit cards accept applications from Australian permanent residents and citizens. Some also have options for temporary residents, with specific eligibility requirements around the types of visas accepted.
Credit history. Banks and other financial institutions check your credit report when you apply for a credit card, and ideally there shouldn't be any history of late payments, defaulted accounts or bankruptcy. If you don't have anything on your credit report, aim to provide as much supporting documentation as possible.
Age. You need to be at least 18 years of age to get a credit card in Australia.
💡Tip: Credit card issuers set the eligibility criteria as part of their responsible lending requirements. But you can also use them as a way to filter out cards that may not work for you.
Extra features
It can be easier to get used to a credit card that just has the basics. But you can factor in a particular feature that you want.
For example, if rewards are the main reason you want a credit card, have a plan for repayments and decide if the value you'll get from rewards is worth the card's costs.
Wondering if you'll get approved?
Only 9% of Australians say they've been rejected for a credit card, according to our consumer sentiment tracker (November data). 80% of Australians say they've never been rejected for any products at all.
Alternatives to credit cards
Personal loans. A personal loan lets you borrow a fixed amount of money and repay it over a fixed period of time. After that, the loan account is closed. This can be helpful if you want to pay for a holiday, wedding or other big expenses. If you make all the repayments on time, it also helps build up good credit history.
Buy now pay later. Afterpay and other BNPL accounts let you buy what you want with partnered stores, then repay it in installments. There are usually account fees and, similar to credit cards, you can use the account for as long as you want if you meet the repayment responsibilities. BNPL doesn't usually add to your credit report, but could help you get used to paying off purchases over time.
Debit cards with rewards. If you want extra value from your spending, there are some debit cards in Australia that offer rewards such as cashback or points. They don't typically offer as much value as a similar credit card, but it may be more affordable if that's your main goal.
Why you can trust Finder's credit card experts
We're free
Our comparison tables are completely free to use. We link you directly to the lender's secure application page. Better still, we regularly have exclusive offers that you won't find on any other site.
We're experts
We've researched and rated hundreds of cards as part of our Finder Awards. We've published 200+ guides and our in-house experts regularly appear on Sunrise, 7News and SBS News.
We're independent
Unlike other comparison sites, we're not owned by a bank or lender. That means our opinions are our own and you can compare nearly every credit card in Australia on Finder.
We're here to help
Since 2012, we've helped almost 6 million people find a credit card by comprehensively comparing offers. We'll never ask for your personal information. We're here to help you make a decision.
Frequently asked questions
Your first credit card should have affordable features that make it easy for you to manage. So it's often a good idea to start with a credit card that has a low limit, low fees and a low interest rate.
You'll usually get confirmation of your application online or by email. Most banks and lenders offer a response within 60 seconds, but will contact you if they need more information before making a final decision.
It's usually a good idea to wait a few months after starting a job before you apply for a credit card. This gives you time to collect payslips, which you'll need to provide for the application. It also helps show the lender that your employment is stable.
But technically, you can apply for a credit card at any time when you meet the requirements. Finder's guide on credit cards for new employees has more details.
A credit card adds to your credit history in Australia and is factored into your credit score. Each time you apply for a credit card, the details are listed on your credit report. Other details, including your credit limit and repayment history are also added. Finder's guide to credit scores has more details about what accounts build credit history.
Amy Bradney-George is the senior writer for credit cards at Finder, and editorial lead for Finder Green. She has over 14 years’ experience as a journalist, with a particular focus on personal finance, and has been featured in publications including ABC News, Money Magazine and The Sydney Morning Herald.
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