Credit Card Guide

Credit cards have a number of features that allow us to sort them into a number of categories. These categories discussed below meet the needs of a particular group of people.

The main features of credit cards that allow us to categorise them are:

  • Interest rates
  • Fees
  • Features or rewards programs
  • Interest free days

Your behaviour or intended use of a credit card should dictate which sort of card you should apply for.

Large loan
If you intend to use your credit card for a large purchase that will not be fully repaid by the end of the month you should consider a low interest credit card.

Regular shopper who fully repays by end of interest free period
If you always fully repay your outstanding debt before the end of the interest free days repayment period then the interest rate is not as important. You might wish to consider a rewards program. Interest free day periods vary from nil to up to 55 days. You should also be aware that cash withdrawals from most credit cards do not have any interest free days and in most cases have a higher interest rate applied.

Emergency user
If you rarely use or only want the security of accessing a lump sum of cash in emergencies you might wish to consider a low or no annual fee credit card.

Rewards Program
Rewards program credit cards come in a multitude of forms from airline tickets to grocery store cash rewards. You should research carefully to ensure your spending habits will actually get you the reward you seek as some rewards program points expire. If your spending habits do not change or you are prepared to change to a new store then these might be for you.

Prestige Credit Cards
Prestige credit cards include gold credit cards and platinum credit cards. These cards typically have a higher interest rate and a higher annual fee. In return they may offer access to features such as insurance cover on items purchased with the card, travel insurance and concierge services that may help you make a booking for a restaurant or get tickets for concerts.

Knowing what your needs are or intended purpose will help you narrow down what sort of credit card you need.