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What type of credit card is right for you?

Credit cards come with a range of benefits, from rewards and interest-free periods to flexible repayments.

In this guide, we compare the different types of credit cards and weigh up the pros and cons of each, so you can feel more confident choosing the best card for you.

Low rate credit card

A low rate credit card refers to the interest you'll pay on your balance.

Your credit card balance is the debt you carry over from one month to another after spending money on your card.

Because credit is borrowed money, you pay interest on your balance each month.

A low rate credit card typically has a lower interest rate than other cards, so it'll be cheaper if you regularly carry over your balance each month.

But, if you pay off your credit card balance in full every month before the interest is due, you can avoid paying interest altogether.

And some low rate credit cards might have a higher annual fee to compensate for the lower rate. So, depending on how you intend to use your card, the lowest rate card might not necessarily be the cheapest.

Rewards credit card

Many credit cards will give you some kind of reward for your spending.

Here are some popular credit card rewards you're likely to see:

  • cashback - for example, you could get 1% cashback on all purchases made with your card
  • Air Miles
  • shopping vouchers
  • discounts on dining and entertainment
  • travel insurance and other travel perks

The most valuable reward depends on your personal situation.

If you travel a lot, a credit card with travel insurance and air mile rewards may be best for you. Or, if you like to dine out, you could choose a card with some great dining discounts.

Remember to look at the interest rate on a card and any annual fee, and weigh these up against the rewards on offer to see what's best for you.

Explore: Compare our credit cards

0% purchase credit card

Some credit cards offer an initial interest-free period in which you'll pay 0% interest on your purchases.

This can be a great way to pay for an expensive item, like a holiday or your yearly rent, repaying your balance monthly without interest. That's as long as you pay it off completely before your free period ends.

It's important to still have look at what the Fixed Annual percentage rate will be after your 0% period ends.

Explore: What is a Flexi Instalment Plan?

Balance transfer credit card

Balance transfer credit cards work in a similar way to 0% purchase credit cards. You get an initial period in which you won't pay interest on any outstanding balances you transfer from other cards.

Transferring your balance from one card to another can help consolidate your debt and make it easier to manage.

And a card with no interest on balance transfers for an initial period can help you repay what you owe gradually at a lower cost.

Once your balance transfer interest-free period ends, you'll be charged at your card's Fixed Annual percentage rate, so try and clear your balance before this date if you can.

Explore: What is a balance transfer?

Credit builder card

Using a credit card responsibly is a great way to boost your credit score.

When you apply to borrow money, for example, through a mortgage, your bank will check your credit score to help decide whether to lend to you.

If you've managed debt well in the past, you'll have a higher score, and you'll be more likely to get approved.

And using a credit card is a great way to demonstrate your ability to manage debt, as long as you use it in the right way.

Here are the key things to remember when using a credit card to boost your credit score:

You can check your current credit score on the AECB website.

Travel credit card

If you travel a lot, whether it's for business or pleasure, a credit card with travel rewards might be the best for you.

Although you could pay an annual fee or a higher interest rate for this type of card, the travel benefits can outweigh the costs.

Here are some popular travel credit card perks:

  • Air Miles - accumulate free air miles by using your card
  • free travel insurance
  • exclusive airport lounge access
  • dining and entertainment discounts for when you're abroad
  • competitive exchange rates for overseas spending on your card

Money transfer credit card

Some credit cards allow you to transfer credit directly into your bank account, usually for a fee. This could be useful to pay off your overdraft or to prepare for a large scheduled payment that's due from your account.

We offer this service through our Cash Instalment Plans.

Explore: What is a Cash Instalment Plan?

Explore more

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