Credit card: What’s Best for Me?

Personal Finance

Team MONEYME|15 June 2021| 2-minute read

Credit cards have become a popular payment method for many people, but with such a wide range of credit cards in Australia, how do you know which one is the best for you? Not to mention that there are other alternatives, such as a line of credit or personal loans.

Things to consider

There are many factors to take into account when choosing the credit card that is right for you, such as interest rates and credit limits. If you are planning on paying back the full amount each month, you may be better off finding a credit card that offers more interest-free days rather than the credit card with the lowest interest rate.

Some credit cards come with an introductory (or honeymoon) interest rate which can be great to start with, but when doing your budgeting you’ll need to keep in mind that the low rate is not going to last forever. When it comes to credit limits, it’s not always best to take the highest limit offered to you. Make sure you set a limit that you can comfortably afford to pay back!

Advantages of using a credit card

Convenient: Credit cards are very easy to use and they are accepted by the majority of businesses in-store, online, over the phone and even overseas.

Using a credit card means you can make transactions and purchases without needing to have the cash upfront or the money in the bank. You’ve then got different options around how and when you pay it back. It can also be a great way to keep track of your expenses. 

Rewards programs: Many credit cards come with additional perks such as rewards points that can be used to purchase a variety of items, frequent flyer points or travel insurance cover.

These types of credit cards often charge higher interest rates or fees, so depending on how valuable the rewards are to you, but you will need to look closely at the terms of the offer and weigh up whether the benefits outweigh the costs.

Security features: If you lose cash, it is generally gone forever. If your credit card is lost or stolen, you can report it missing and your card can be cancelled. Many credit card providers will also notify their customers if they see any suspicious transactions. Using a credit card can also save you from needing to carry around a lot of cash.

Disadvantages of using a credit card

Spending beyond your means: With the convenience of using a credit card, if you are an impulse buyer it can be tempting to buy more than you can afford to pay back, making it is easy for you to get into debt.

You only need to meet minimum repayments each month, but if you don’t pay the full amount back each payment period the interest can really start to add up! Some stores also add surcharges when you are purchasing a credit card.

Watch out for the fees: When choosing a credit card it is important to take a close look at the fees. Credit cards can charge fees including annual or monthly fees, late repayment fees, cash advance fees, fees for going over the credit limit, fees when you use a credit card at certain shops or when travelling overseas.

The fine print on many credit cards can be confusing, but it’s worth taking the time to check what the fees and charges are so you can choose one that fits well with how you will be using your credit card.

The verdict

When used responsibly and wisely, a credit card can be very handy but it’s important to make sure you keep your spending within your means. If you are thinking about getting a credit card, you’ll need to assess different credit card options to help you apply for the best credit card for your circumstances.

Suggested alternative

If you are in the market for a new credit card, MONEYME has introduced Freestyle – a virtual credit account that is like a credit card but even better. It provides a digital line of credit of up to $20,000 that can be easily added to your mobile wallet. This means you won’t have to wait for a physical card to arrive in the mail, but you can start using your credit as soon as it is approved.

MONEYME’s Freestyle virtual Mastercard® offers up to 55 days interest-free on purchases if you repay your balance in full each payment period and it can be used anywhere that accepts Mastercard. You can use your virtual credit card as your payment method when shopping online or using tap n pay in-store, and you can even send money to your bank account.

To be eligible to apply you’ll need to be an Australian citizen or a resident, at least 18 years old and have a regular source of income. MONEYME also offers low rate cash loans. To find out further information about instant loans and credit cards, contact MONEYME today!