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The main types of credit cards?

As mentioned above, there is a lot of choice when choosing a credit card. So check out our list of card types below to help you decide which plastic deserves a spot in your wallet:

Balance transfer credit card: Have you racked up debt on your current plastic? Then you could apply for a balance transfer credit card. This would allow you to transfer your existing debt to a new balance transfer card with a zero percent interest rate. Keep in mind that the 0% balance transfer rate offer is only available for a set period of 6 to 36 months, according to the Mozo database. Also remember, if you still have debts to pay after this 0% period, the rate will revert to the standard purchase rate or even the cash advance rate, which can sometimes be higher than 25% (ouch). So make sure you use Mozo’s credit card debt payment calculator to work out how much you’ll have to pay back each month to prepare to blast debt within the balance transfer term. Note that the balance transfer rate only applies to the existing debt you transfer to the card, not new purchases you make with the card. And if you’ve taken advantage of a BT debt transfer offer, you won’t get interest-free days on new purchases until your balance is fully paid. For this reason, transfer credit cards are often best used only to pay off existing debt, not new expenses.

Low Interest Rate Credit Card: If you’re one of those people who sometimes has a balance on your card instead of paying it off in full every month, a credit card with a low interest rate (starting at under 10% and no more than 14%) might be on your shopping list. That way, if you have the odd big expense like a vacation or a big ticket purchase that takes you a few months to pay off, you won’t be charged an excessive interest rate for the privilege. Low-interest cards generally don’t come with bells and whistles like rewards programs, travel insurance, or other perks, but with an average credit card interest rate of over 17%, they’re significantly cheaper pieces of plastic. While most low-rate credit cards charge an annual fee, this is generally much lower than an annual fee for a fancier platinum or rewards card, and the cost of the annual fee is likely far less than paying a high interest rate on your expenses each month.

Interest-free credit card: If you’re planning to buy some big ticket items in the near future and need some breathing room to pay them off, you can opt for a credit card with an interest-free “honeymoon” period. Interest-free credit cards typically mean you get 0% interest on purchases for an introductory period of between 6 and 17 months, according to the Mozo database. However, after the introductory period has expired, the purchase interest increases again. So if you choose an intro rate card, make sure it not only has a competitive “honeymoon” rate, but also has a low response rate. That being said, interest-free credit cards are generally a good fit for conscientious lenders who can commit to paying for their purchases before the interest-free period ends, and who don’t let the 0% rate trick them into buying more things than they do really need .

Credit card with no annual fee: If you really only use your credit card as a convenient payment method, don’t value perks such as bonus programs, and diligently pay off your card balance in full every month, your credit card could do with a credit card with no annual fee. You don’t have to make sure that the interest rate is also extremely low because you don’t have to worry about being charged interest if you pay your credit card bill in full and on time every month. There are some no annual fee credit cards on the market that offer rewards programs and other perks, but for the most part, these cards are no-frills options that are suitable for those who don’t want to pay a fee for the privilege of owning a credit card.

Credit Cards: Looking for a card that will allow you to earn reward points on your spending? Then you are in the market for a premium credit card. Rewards cards can either link directly to frequent flyer programs to allow you to earn Qantas frequent flyer, Virgin Velocity or other airline points towards your spending, or they can link to a more general rewards program allowing you to earn and redeem points for all gift cards to discounts on retail purchases to travel. The downside to premium credit cards is that they generally come with higher annual fees and higher interest rates than no-frills credit cards. This means you need to be sure you’re earning and redeeming enough rewards each year to offset the annual fee, and also pay off your credit card balance in full each month to avoid any interest charges that could negate the value of the rewards.

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