There are currently more than 12 million active credit cards in Australia. According to Finder, many Australians use credit cards to earn reward points and flights. Contrary to popular belief, credit cards aren’t debt traps. Using credit cards efficiently can save you thousands of dollars on travel. Additionally, they can provide access to luxuries such as lounge invitations.
In this article, we’re laying it all bare. We’ll guide you on how to use credit cards safely and effectively so you can maximise rewards and, of course, access free perks.
I’ll outline credit card hacks so you can get the most out of your card!
🤔Understanding Credit Cards and Common Misconceptions
Misconceptions About Credit Cards
You’ve probably heard it all – why would anyone even use credit cards? You must like paying high interest, right?
The answers are quite simple. Let’s clear this up: if you pay the amount owing on your credit card on time and in full, you won’t be hit with any high interest.
However, if you find yourself overspending on your credit card, you will incur interest. This is why it’s essential to diligently track your expenses. Fortunately, gone are the days when you had to manually track expenses in an Excel spreadsheet. There are now many free budgeting tools available to help you.
One user-friendly and aesthetically pleasing option is Billroo. This app allows you to connect your credit cards and bank accounts, giving you a clear view of where your money is going and how much you’re spending.
Some Of The Best Credit Cards
Effects On Credit Score
Doesn’t that affect your credit score and your ability to get a home loan?
You can have multiple active credit cards and still have an excellent credit score. Your credit score can be negatively impacted by two things:
- Late payments
- Applying for a credit card and being rejected
That’s why it’s crucial to know your credit score to gauge whether you’re likely to be approved for a credit card. Your bank, or money apps like Finder, can provide you with your credit score.
When it comes to home loans, credit cards can impact your borrowing capacity. Having a high credit card limit reduces the amount you’re eligible to borrow, even if you always pay off your balance on time and in full.
💫Tips for Using Credit Cards Safely
Spend only what you can repay: You need to use your credit card like a debit card. This means spending money on items that you’d normally purchase with your debit card
Always pay balances in full: Pay off your credit card on time every single month. I’d hate for you to be charged interest!
Cancel unused cards: When applying for a new credit card, you should cancel any credit cards that you’re no longer using. This is vital, especially if you are applying for a home loan. Having too many credit cards could impact your borrowing capacity. Unfortunately, when applying for home loans, banks look at the limit on your credit card as debt. Reducing your credit card limit can make your home loan application more competitive.
💳Maximizing Credit Card Benefits
Importance of Bonus Points
When looking for a new credit card, your attention should be on the amount of bonus points you will earn. With credit card points, you can truly travel in luxury. You can fly business class and experience different business lounges all over the world – without forking out thousands of dollars. When you sign up for a new credit card, you can earn bonus points ranging from 20,000 up to 150,000. One Qantas Point usually equals about 1 to 2 cents in value, so the sign-up bonuses are incredible! For example, if you signed up for a credit card with 100,000 points as a bonus, this would give you a dollar value between $1,000 and $2,000.
Free Lounge Invitation
You can get free lounge invitations with credit cards. A lot of Amex credit cards give you free business lounge invitations. When you are at the airport waiting for your flight, you can go to the business lounge and get free food, free drinks—pretty much anything for free!
Annual Fees
You shouldn’t worry too much about annual fees when it comes to credit cards. For many credit cards, you are often able to redeem the annual fee for free travel. If you have a look at the Qantas credit card website, they have a list of credit cards and show you which ones you can redeem your annual fee for free travel credit. So essentially, you might be paying $300 for your credit card annual fee, but you’re also able to use the $300 in travel credit.
💸Credit Card Hacks for Australians
Bank
It doesn’t matter if the credit card you’re applying for is attached to a particular bank. This is because you don’t need to be a customer of that bank to be approved for a credit card. You don’t have to switch your savings or anything like that, as you’re essentially just using the bank’s credit card.
Minimum Salary Requirements
Some credit cards have a minimum annual salary requirement to be eligible. It’s crucial to read the fine print to ensure you’re eligible for the credit card. Many big-name credit card companies, like American Express, which offer enormous bonus points, have high salary requirements.
Focus on Bonus Points
When you’re looking for credit cards, you’ll be flooded with so many options. Let’s use Qantas credit cards as an example since it’s Australia’s national airline – the differentiation between the cards lies in the bonus points. Bonus points are one of the first things you should consider when applying for a new credit card. They will provide you with the best value when signing up. A hack is to sign up for a credit card that offers as many bonus points as possible.
Annual Fees
All credit cards have annual fees; however, some allow fees to be redeemable as travel credit. Let’s take a look at the Qantas American Express Ultimate Card. It has a $450 annual fee but also offers $450 in Qantas travel credit.
✈️ Before We Take Off
Choosing a credit card comes down to your goals and what you want to get out of the card. There are many factors to consider, including your personality, how much you earn, what kind of rewards you want to redeem, and so forth. For many Australians, getting a Qantas credit card makes sense. It has a great points system where you can redeem points for travel. If you don’t quite have the travel bug, other credit cards offer points for gift cards to shops, etc. So, shop around for different credit cards, and you might just find the one for you.
The answer is quite simple. Let’s clear this up: if you pay the amount owing on your credit card on time and in full, you won’t be hit with any high interest.
You can have multiple active credit cards and still have an excellent credit score. Your credit score can be negatively impacted by two things; late payments applying for a credit card and being rejected.
If the minimum spend requirement is more than what you would normally spend, consider putting through some business expenses. Use the card for items you wouldn’t typically purchase for personal use to help meet the minimum spend requirement for your credit card.
You shouldn’t worry too much about annual fees when it comes to credit cards. For many credit cards, you are often able to redeem the annual fee for free travel. So essentially, you might be paying $300 for your credit card annual fee, but you’re also able to use the $300 in travel credit.
Billroo is a fantastic app to use to diligently track your expenses. This app allows you to connect your credit cards and bank accounts, giving you a clear view of where your money is going and how much you’re spending.
