The very first step you’ll want to take in your credit card journey is to familiarise yourself with the basics – aka the costs and features of a credit card. These include:
Balance | The balance on your credit card is another way of saying the amount of money you owe, including fees and interest. The more you have owing, the less credit you have access to. |
Interest rates | The two main types of interest you may be charged is via the purchase rate and cash advance rate.
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Annual fee | An ongoing fee charged once a year to keep your account open. There are cards that don’t charge this fee, but for those that do, the cost can climb as high as $1,200. |
Foreign transaction fee | A fee charged on overseas spending (including shopping on international websites), typically a percentage of the transaction (2-3%). |
Interest-free period | The number of days you have to repay what is owing on your credit card before you are charged interest. The number of days differs on each card but is typically 44-55 days from the start of each month’s billing cycle. |
Minimum repayment amount | The minimum amount of money you are required to pay each billing cycle. This will either be a percentage of your outstanding balance (around 2-3%) or a dollar figure (around $20-$30). |
Credit limit | The maximum amount of credit you have access to through your card. This can range from as low as a few hundred or thousand dollars, to a near unlimited amount. It will differ for each credit card and can also depend on your income. |
Rewards programs | Some cards come with rewards programs that give you something extra for your spending. These can be in the form of standard rewards programs, frequent flyer programs or cashback rewards. |
Rewards perks | The type of rewards you may find in these programs can include frequent flyer points, appliances, electronics, home goods, gift cards and travel perks such as hotel stays and airport lounge access. |
Card protections | Some cards may offer more protections than others. These may include fraud protection, domestic or international travel insurance, extended warranty, guaranteed pricing schemes and/or rental car excess insurance. |