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05.Credit cards

You can get a competitive interest rate, interest-free days and no annual fee, all on the same card.

Changing your credit card is much like switching bank accounts:

  • To apply for a new card, you’ll need to provide identification. The application form also requires plenty of details about your income, job, other debts — and the financial institution will do a credit check (be aware, too many credit applications can affect your rating).
  • When the new card comes through, make sure you notify all the organisations that take direct debits from your old card — check your old statements for regular payments.
  • Finally, cancel your old card.

If you always pay on time

More than 10 cards have no annual fee and offer a decent number of interest-free days — at least 14 after the statement is produced, or up to 55 interest-free days on some purchases. This only applies if you pay your bill on time, otherwise interest is backdated.

At January 2008, the lowest interest rates:

  • Police Credit Union SA: 10.49%
  • Austral Credit Union: 10.60%
  • NSW Teachers Credit Union: 11.50%
  • Virgin Money: 12.99%

If you never pay on time or in full

Carrying a card debt from month to month is one of the most expensive ways to borrow money, and interest rates have been creeping up. Try to clear this debt as quickly as possible:

  • At the very least, make the minimum monthly payment to avoid late payment fees.
  • Avoid using the card for new transactions — interest may apply on them from day one. Use a debit card instead, where you can only spend what’s in your account.
  • Consider switching to a card that charges no interest on balance transfers for the first six months. It means you’ll stop paying interest on the old debt you transfer into it, allowing you to pay it off faster. There are traps though — if you don’t clear the debt in the intro period it could be a bad deal, new transactions may attract interest from day one and you still need to pay the monthly minimum to avoid penalties.
  • Another option is to consolidate your debt into a single loan, and pay it off fast.

If you occasionally pay late or not in full

As well as choosing a card with a low interest rate, low annual fee and a good number of interest-free days, bear in mind that the way the company calculates interest can have a big impact too.

When we checked credit card policies in mid 2007, we found that the fairest card providers are Bank of Queensland, Bendigo Bank and particularly NSW Teachers Credit Union, which has no annual fee, up to 55 interest-free days on purchases, and an 11.5% interest rate

International transactions

The Wizard Clear Advantage MasterCard has no fee for overseas or foreign currency purchases. Most companies charge around 2%.


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