Choosing your first credit card

A credit card is a useful tool – you can use it to shop online and in-store, both in Australia and overseas. You can also use it to build your credit score, earn rewards points or access cash in an emergency.  

If you’re looking for your first credit card, it’s a good idea to keep things simple. A card with low rates and fees and basic features can be easier to manage if you’ve never used one before.

Here’s what to consider when choosing your first credit card.

Interest rates

When you use a credit card, you’re borrowing money from the bank, which you’ll have to pay back. Most credit cards charge interest on any purchases you make with the credit card. When exploring different cards, it’s important to check what interest rate you’ll be charged. Interest charges can add up even if you make repayments on time, especially if you’re only making the minimum repayment.

Many credit cards come with an interest-free period – this means if you pay off your balance in full by the due date on your statement, you won’t be charged interest. Keep in mind that interest-free periods don’t apply to some types of transactions, like cash advances.

Card fees

Most credit cards charge fees, so make sure you understand what fees apply to any card you’re considering. Most credit cards come with an annual fee that you’ll need to pay once a year. Many cards also charge a fee if you miss a repayment – this is on top of any interest charges.

Learn more about credit card fees and how to avoid paying them.  

Credit limit

The credit limit is the maximum amount you can borrow with your credit card. It’s important to know what this limit is and make sure it’s an amount you can comfortably pay back. If you choose a card with a limit that’s too high, you may struggle to make your repayments.

Eligibility criteria

Different cards have different requirements that you need to meet before you can apply. You’ll usually need to be at least 18 before you can apply for a credit card. The bank or financial instruction may need to verify your income and residency status. They’ll also run a credit check before you’re approved. It’s a good idea to check your credit report before you apply for a credit card.