In an effort to provide alternative options for customers in the growing buy now, pay later environment, Westpac announced it is launching a new payment plan option for its credit card customers. 

Westpac’s PartPay will be available on all its credit cards, with the exception of the Flex credit card. While PartPay will charge no interest and no additional fees for purchases made, if you miss a payment, the charge will go to your credit card, where it will attract interest charges immediately.

In the meantime, RateCity research shows that there are 13 credit cards offering bulk bonus points on sign up, ranging from 100,000 points to 300,000 points. If you’re an avid points chaser, you may want to compare the following credit card options:

• 300,000 points – Citi Prestige
• 150,000 points – ANZ Rewards Black
• 150,000 points – St. George / Bank of Melbourne / BankSA Amplify Signature
• 150,000 points – Bank of Queensland Platinum Visa
• 150,000 points – Qantas Money Premier Titanium

Keep in mind that there is more to a credit card than the points on offer. Different card issuers have different rewards programs and the value of each issuer’s points will differ. For example, 50,000 points with one credit card rewards program may hold less purchasing power than 50,000 points with another credit card rewards program.

Updated by Alex Ritchie on March 01, 2023

Credit cards are a plastic card (like a debit card) issued by financial institutions that give the holder access to a line of credit for purchases. The amount of credit you have access to is called your credit limit, and you may be charged interest on any outstanding purchases made. 

Credit cards can be a helpful financial tool that allow you to make purchases when you don’t immediately have the funds. But they can also be risky if used incorrectly, and lead to credit card debt. They can be used for everyday purchases, such as your morning coffee, or big-ticket items, such as a new appliance. There is no limit on what you can spend on, only a limit for how much you can spend.

Credit cards vary wildly and, depending on what you want a credit card for, you may find one suits you better than another. Whether you’re a traveller, rewards points chaser, or big spender, it pays to do your research around which credit card could be right for you.

There is no one-size-fits-all approach when it comes to credit cards. There are a range of different types of credit cards that may better suit various customers, depending on your financial situation and goals. 

To know which credit card may suit you, you’ll need to look at your credit card Spending Profile. 

There are four credit card Spending Profiles:

1. The habitual spender
2. The impulse/occasional spender
3. The everyday spender
4. The big spender

Look at your income, expenses, and spending habits. Compare this to the different Spending Profiles in our Credit Card Guide and take into account how you want to use your credit card (to build rewards points, for overseas spending etc.). 

Credit cards can be a helpful financial tool for cardholders, but they can also be an easy way to accrue debt or hurt your credit score if you’re not careful. It is important that those looking to take out a new or additional credit card are aware of the benefits and disadvantages of this financial product before applying.

Benefits and perks of a credit card:

• Access to credit - The main draw of a credit card is that it offers cardholders access to a line of credit. Whether it is used to pay for a holiday, to purchase new appliances, or just in case of an emergency, credit cards offer customers the ability to access funds they otherwise wouldn’t have. Credit limits differ for each cardholder depending on the provider and the cardholder's personal financial situation.
• Rewards and perks - Some credit cards offer more than credit to cardholders. Additional benefits may up for grabs from some card issuers, including rewards programs, frequent flyer programs, shopping rewards, cashback offers and complimentary insurances, including domestic and international travel insurance, as well as rental vehicle excess insurance.
• Interest-free windows - Credit cards may offer two types of interest-free windows: interest-free days and interest-free periods. Interest-free days (generally 44-55 days) let cardholders have time to pay off their latest statement before they begin to accrue interest. There are also zero per cent purchase cards, as well as balance transfer credit cards, which offer longer interest-free periods (generally six months to two years). These may be used to make one-off purchases, which are then repaid without accruing interest, or used as debt repayment tools.
• Boost your credit score - Making regular repayments on a credit card and paying your balance in full each statement period is one option cardholders have to boost their credit score.

Risks of a credit card:

• Easy to grow debt - Due to the nature of credit cards, cardholders who struggle to pay their balance in full each statement period will find themselves quickly accruing interest. As interest grows on outstanding balances, so too does the level of debt. Cardholders who may easily fall into this debt trap could look for low rate and low fee credit card options instead.
• Hurting your credit history - Making multiple credit card applications at once, or having one or more outstanding credit card debts, can hurt a cardholders’ credit history. Cardholders run the risk of defaulting on their credit card, or more serious credit infringements, due to multiple late payments.
• Fees - Credit cards charge a range of fees, from annual fees to foreign transaction fees. Over time, these additional costs can begin to add up, even if a cardholder has opted for a lower rate credit card.

Whether or not you take out a credit card is a personal decision, and not one to be made lightly. As credit cards are easy to misuse, even the most diligent cardholder can quickly begin accruing debt if they can’t pay their balance in time and have a high interest rate.  

It may be easier to be approved for a credit card than some other forms of finance, like a home loan, as you don’t need to offer up a deposit to be approved. But credit cards may come with some of the highest interest rates on the market, climbing into the high teens. Whereas a home loan may charge a rate starting with a 3 or below. An unsecured personal loan may charge a comparable interest rate to a credit card, however a personal loan has a set repayment structure in place to help ensure your debt is repaid over the loan term. So, while a credit card may be easier to be approved for than a home loan or personal loan, the ability to see you accrue debt is higher.

If you are looking for your first credit card, you may want to consider prioritising low-rate options so that you can get used to spending and paying off your outstanding balance in full each statement period, without the risk of accruing too much debt. You could also consider no-interest alternatives, such as a buy now, pay later platform like Afterpay.

There's no shortage of cards to include in your credit card comparison. Your credit card choice will ultimately depend on what you want to use your card for, your financial situation, and the perks you may receive whenever you do.

Some of the most popular credit card types include:

There are financial product alternatives available for those looking to make purchases but who may have the funds right now. Keep in mind that all financial products come with their own risks and benefits, and it’s important to do your own research before applying.

Personal loans

A personal loan allows borrowers access to a specific amount of funds (typically between $5,000 and $50,000), to be repaid over a set loan term (typically 1-7 years). Unlike a credit card which offers you access to credit over an extended period, a personal loan must be repaid over the loan term at risk of credit infringement.

Personal loans may come with higher ongoing repayments than a credit card, as the minimum credit card repayment may be $20 or 2% of your card balance. However, secured personal loans typically charge lower interest rates than credit cards on average. The average credit card rate has sat around 16% for decades, whereas secured personal loan interest rates may sit around 8-10%.

Buy now, pay later

Another alternative that is growing in popularity is Buy Now, Pay Later (BNPL) platforms, such as Afterpay or Zip Pay. Interest in BNPL platforms has actually increased in response to some of the negatives associated with credit cards, like high interest rates. BNPL platforms allow you access to credit but typically do not charge interest on purchases made. Instead, repayments are broken up into small instalments and repaid typically each fortnight. You typically won’t be charged an interest rate, but you may be charged a card account-keeping fee or a late payment fee.

Line of credit

Like a credit card, a line of credit involves a lender providing you access to credit with interest only charged on the amount you spend. There are two main types: unsecured line of credit and a home equity loan.

An unsecured line of credit may be used as an alternative to a personal loan or car loan, as you can access funds greater than a standard credit card limit (usually between $5,000 to $100,000). You only spend what you need and are charged interest on what you spend, instead of being charged ongoing repayments for a full personal loan amount. This may be more economical for funding an ongoing project, such as home renovations, for example.

A home equity loan allows you to draw down ono the equity in your home, typically for purposes like renovations, medical bills, urgent repairs and more.

Here are key factors to consider when shopping around for your best credit card:

• Purpose: How do you plan on using your credit card? For example, is it for everyday shopping or major purchases only, buying overseas or travel, or transferring an existing balance? You may need access to credit for work and be better off comparing business credit cards. Identify your card purpose so you can compare apples with apples.
• Interest rates: Credit cards can charge different rates for purchases, cash advances and balance transfers. Also, keep an eye out for introductory, promotional, or “honeymoon” rates that revert to a higher rate after a set period (typically the first year). Knowing what rates you may be charged before applying can keep you from accruing debt.
• Interest-free periods: The number of days allocated to pay your credit card balance before you’re charged the purchase rate. The higher number of days, the more breathing room to make repayments. A typical interest-free period is around 44 days.
• Rewards programs and extras: Rewards card programs let you earn points on your everyday spending that can be exchanged for goods, transferred into frequent flyer points, or may come in the form of cashback deals. Some credit cards also offer extras like not charging a fee for supplementary cards for additional cardholders. These programs and extras typically incur higher annual fees.
• Card fees and charges: Are there any extra costs, such as annual fees, foreign transaction fees, cash advance fees or charges for overseas purchases? Consider whether the credit card’s benefits would likely be worth these costs.
• Credit card type: There are three main credit card types - Visa, MasterCard and American Express (AMEX). Visa and MasterCard are quite similar in that they are just payment processing systems, so they cannot issue cards directly to customers. Whereas AMEX is both a payment processing system and can issue its own cards. When making payments, Visa and MasterCard typically carry lower card fees than AMEX.

When applying for a credit card, the card issuer will need to assess your personal financial situation, budget, and credit history to determine if you can safely manage the risks associated with said card.

To do this, you’ll need to provide the following:

• Proof of income: salaries or wages
• Proof of employment: two or more recent payslips
• Photo ID (driver’s license, proof of age card or passport)
• Additional assets and income (such as a savings account or managed investments)
• Credit history
• Tax file number
• Details of any existing loans, such as personal loans, a lease or other credit cards
• Recent tax returns, particularly if you’re self-employed

It’s worth keeping in mind that you will need to meet credit card eligibility criteria to be approved, such as:

• Being an Australian citizen or permanent resident
• 18 years old or over
• No history of bankruptcy
• Meet minimum income requirements (can range from $10,000 to $1000,000 and higher for platinum and above cards)
• Good credit rating

Review the card issuer's eligibility criteria, T&Cs and product disclosure statement before you apply. You’ll want to meet all requirements, such as minimum income thresholds, to boost your chances of card approval. Credit card providers will assess your eligibility at different scales, depending on the type of card you’re applying for. For example, if you’re applying for a Titanium credit card and you don’t meet the minimum income required, your application is more likely to be rejected.

Now you know the type of card you want, and the extras to keep an eye out for, it’s time to narrow down your options. The best way to compare credit cards is to do your research and use comparison tables.

Identify your Spending Profile

Firstly, using the information above and in the Credit Card Guide, you’ll want to choose your Spending Profile. This may help to point you in the right direction of which type of credit card may best suit your financial situation and budget. Whether you’re a habitual spending, impulse spender, everyday spender or a big spender, there is a credit card out there that may suit your needs.

Comparison tables

Comparison tables are a helpful way to compare things equally, side by side. View a range of credit card options in a table that outlines some of the more significant costs and features. These include the purchase rate, annual fees, maximum days interest free and late payment fees. Filter down your options to create a short list of credit cards.

Once you’ve made a short list, it’s worth checking out the product disclosure statement for those cards. These are kept on the credit card provider's website. They offer more detail on the cards you’re interested in, such as a breakdown of all card fees and interest rates.