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Working out the best credit card for you

Working out what the best credit card or credit cards to have is easy and only takes a few minutes. All you need to do is work out what your needs are and how you are going to use the card.

"I don't think I will pay off my credit card bill in full most months" 

Your best credit card might be a:

If you think you'll only pay some of the amount off your credit card each month, and carry over part of the balance month to month, then a credit card with a low annual interest rate could be the best credit card for you.

If you think you might use your credit card a lot, a low interest credit card will reduce the amount of interest you pay on the balance each month. Having less interest to pay will allow you to pay off your balance easier and faster because more of your repayments go towards paying off the amount of your purchases and not towards paying the interest.

"I have a large balance on a high-interest credit card and want to swap to a lower rate credit card so I can try and pay off the balance, but I don't think I will pay it off in full each month" 

Your best credit card might be a:

If you have a large balance on another credit card with a high interest rate, you could consider taking advantage of a credit card balance transfer promotion. This means you transfer the balance of your existing credit card to another bank’s credit card that offers you a zero percent per annum interest rate for a fixed period of time. You will be able to pay off your balance quicker because you will save on interest payments. And, because often the interest rate is offered to you for a set period of time, it will help you set a goal of paying off the balance before the interest rate expires.

Before you consider if this is the best credit card for you, you should:

  • find out the terms of payment, when the promotional rate will expire, and what the regular interest rate will be after the promotional interest rate period ends
  • make sure that the provider of your new credit card will give you enough credit to move the entire balance from your old credit card to new the new credit card
  • check what credit cards are included in the promotion – some providers may not accept the card you are transferring from
  • be aware that you may have to close the credit card account you are transferring from.

NOTE: If you think you might be a heavy user of a credit card, you should consider staying away from credit cards that offer a sign-up bonus or cards that offer special discounts or rewards, so you aren't tempted to spend.

"I will only use my credit card occasionally and most of the time I'll pay it off each month" 

Your best credit card might be a:

If you think you'll only use your credit card to pay your bills, or buy a couple of things, and pay off your entire balance at the end of each month, then a credit card with a low annual account fee might be best for you.

NOTE: If you are considering a credit card with a rewards programme, make sure that the value of the rewards is more than what you would pay in fees and interest. If you don't use your credit card enough, you might not be able to earn enough rewards or benefit from them.

"I will use my credit card a lot and I will only make the minimum repayments each month" 

Your best credit card might be a:

If you think you'll only pay some of the amount off your credit card each month, and carry over part of the balance month to month, then a credit card with a low annual interest rate could be the best credit card for you.

If you think you might use your credit card a lot, a low interest credit card will reduce the amount of interest your pay on the balance each month. Having less interest to pay will allow you to pay off your balance easier and faster because more of your repayments go towards paying off the amount of your purchases and not towards paying the interest.

"I will buy most things with my credit card and then pay it off each month" 

Your best credit card might be a:

If you think you will use your credit card to pay for most things and then pay off the entire balance each month, then a credit card with a rewards programme may be the best credit card for you. This type of credit card could offer you the best value for money, because you can earn rewards or points, to use with other businesses, based on the number of dollars you spend using the card.

Make sure you look at the fees associated with the credit card, such as the interest rate, annual fee, extra fees for the rewards programme, and make sure the value of the rewards will exceed the amount of fees you pay.

Other things to keep in mind

When choosing the best credit card for you, you should also:

  • know what the extra fees associated with the credit card are
  • understand the terms and conditions around late payment penalties
  • understand how interest is charged on purchases
  • take note of the number of interest-free days you'll receive on purchases
  • check out the customer service of the provider, i.e. how they treat their customers and how quick and efficiently they deal with your inquiry.