Credit cards are a common financial tool in Australia, offering convenience, flexibility, and rewards when used responsibly. Whether you’re looking to build credit, cover unexpected expenses, or earn points on everyday purchases, it’s important to understand how credit cards function in the Australian context.
This article explains the basics of credit cards in Australia, including how to apply, manage payments, avoid common pitfalls, and build your credit history. With careful use, credit cards can support your financial goals—while poor management can lead to long-term debt and lower credit scores.
How Credit Cards Work in Australia
A credit card allows you to borrow money up to a pre-approved limit for purchases, bills, or cash advances. Each month, you receive a statement showing how much you’ve spent and how much you need to repay. If you pay off the balance in full by the due date, you usually won’t be charged interest on purchases.
However, if you carry a balance past the interest-free period, you’ll start accruing interest—often at a rate of 15% to 25% annually. Credit cards can also include additional fees such as annual fees, late payment charges, or foreign transaction fees. For a full breakdown, see: How Do Credit Cards Work? An Australian Perspective
Different cards come with varying features, including rewards programs, low-interest options, balance transfer offers, and premium benefits like travel insurance or airport lounge access. It’s important to match your card choice with how you intend to use it.
Choosing the Right Credit Card
Selecting a credit card involves comparing features that meet your spending habits and financial situation. If you plan to pay off your card in full each month, a rewards card with higher fees might offer value. If you’re looking for a safety net or to pay down debt, a low-interest or balance transfer card could be a better choice.
Always read the Product Disclosure Statement (PDS), which outlines all applicable fees, charges, and conditions. Consider the following factors:
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Interest rates on purchases and cash advances
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Length of interest-free period (if any)
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Annual fees or account-keeping charges
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Rewards programs and how points are earned or redeemed
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Balance transfer fees and promotional periods
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Additional perks such as insurance, concierge services, or travel rewards
Using a comparison website or consulting your financial institution can help you make an informed decision.
Credit Cards and Your Credit Score
Using a credit card can impact your credit score positively or negatively depending on how you manage the account. Making on-time payments, staying below your credit limit, and avoiding unnecessary applications are key to maintaining or improving your score.
Late payments, maxing out your card, or missing repayments can lower your credit score and make it harder to access future loans or financial products. Lenders assess your credit history when deciding whether to approve applications for mortgages, car loans, or additional credit cards. To learn more, read: Understanding Your Credit Score in Australia.
Monitoring your credit report regularly—through free providers or credit reporting agencies—can help you catch errors and track your progress.
Tips for Using Credit Cards Responsibly
Here are some essential tips for making the most of your credit card while avoiding common mistakes:
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Pay the full balance each month to avoid interest charges
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Set up automatic payments to avoid missed due dates
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Use only a portion of your available limit to improve your credit score
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Avoid cash advances, which accrue interest immediately and often carry high fees
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Track your spending using your card provider’s app or alerts
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Redeem rewards for items or services you would buy anyway
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Avoid opening multiple cards in a short period, which can impact your credit history
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Know your card’s terms before making international or large purchases
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Review your statements for accuracy and signs of fraud
For more tools and insights on budgeting and borrowing, visit the Remitly Personal Finance Blog.
FAQ: Credit Cards in Australia
1. What is the minimum repayment on a credit card?
It’s usually 2–3% of your balance or a fixed amount (e.g., $20), whichever is greater. Paying only the minimum increases interest costs.
2. Can I get a credit card as a temporary resident or international student?
Some banks offer cards to temporary residents with proof of income and local ID, though limits may be lower and eligibility requirements stricter.
3. Will closing a credit card affect my credit score?
Yes. It can reduce your overall available credit and shorten your credit history, which may impact your score slightly in the short term.
4. What happens if I miss a credit card payment?
You may be charged a late fee and interest. It can also negatively impact your credit score if the payment is overdue by more than 14 days.
5. How many credit cards should I have?
One or two well-managed cards are usually sufficient. The key is to manage them responsibly and avoid unnecessary debt.