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Rewards or Interest?

We want to help find you a credit card which fits with your financial lifestyle. Rewards cards are only helpful if you pay the statement in full every month. Otherwise you may pay more in interest charges than return from potential rewards points.

Points or Interest?

We want to help find you a credit card which fits with your financial lifestyle. Frequent Flyer cards are only helpful if you pay the statement in full every month. Otherwise you may pay more in interest charges than potential free flights.

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How CANSTAR compares credit cards

Canstar Outstanding Value credit cardHow Canstar compares credit cards

CANSTAR uses a sophisticated and unique star ratings methodology to compare credit cards. We compare a wide range of credit card products in Australia and present the results in a simple, user-friendly format. Our rating methodology for comparing credit cards is transparent and extensive.

CANSTAR’s methodology compares all types of personal unsecured credit cards in Australia and accounts for an array of characteristics such as:

  • Fees
  • Interest rates
  • Number of interest-free days
  • Standard features
  • Premium features
  • Rewards programs or loyalty programs
  • No frills card options

The results are reflected in a consumer-friendly 5-star concept, with 5 stars denoting a product offering outstanding value.

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What is a credit card?

A credit card is a form of unsecured personal loan that gives the cardholder access to a revolving line of credit. That line of credit is accessed via a small, plastic card – the credit card.

The cardholder can make purchases up to a specified limit. The ‘spent’ credit can be repaid by the cardholder to the bank by the due date in full or in part. If the credit is only repaid in part, the remaining balance is taken as extended credit and interest will be charged on that amount until the cardholder repays it. For some cards, interest is charged on all purchases and transactions from the day of the transaction.

A credit card can present a higher personal risk to customers financially. It can make it all too easy to spend on impulse if you’re not disciplined about how and when you use the card. Credit cards also typically have high interest rates than other forms of credit such as personal loans, because they are an unsecured debt.

However, credit cards can be useful for a variety of reasons if used responsibly:

  • Build a positive credit history by using the card and paying it off by the due date every month.
  • Anti-fraud protections apply if a card is lost, stolen, or used in online credit card fraud.
  • Rewards programs may apply depending on the card and how it is used.
  • Credit limit available is more than the usual daily limit on a debit card.
  • Can be convenient for making purchases overseas, along with some back-up cash.

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Types of credit cards

There are several different types of credit card, each of which can be compared on the CANSTAR website:

  • Low Rate Cards
  • Low Fee Cards
  • Rewards Credit Cards
  • Frequent Flyer Credit Cards
  • Premium Cards

Then there’s the question of MasterCard vs Visa, or AMEX vs Diner’s Club. In terms of credit card providers, your lender can offer you different credit cards depending on which card payment service they partner with:

  1. MasterCard
  2. Visa Card
  3. American Express Card
  4. Diners Club Card

There is a wealth of different features that are available with credit cards, with options to suit all sorts of needs and budgets. It’s important to consider your circumstances when choosing which credit card is right for you, including:

  • How much you spend per year on your card
  • Whether the annual fee or other costs for a rewards program would be worth it
  • What type of reward you are most likely to use
  • Whether you already have a credit card debt

CANSTAR rates rewards programs for four different levels of annual spending on your credit card – $12,000/year, $24,000/year, $60,000/year, and $120,000/year. A summary of features that we look for in an outstanding value credit card is contained in the Methodology attached to our Credit Card Star Ratings report.

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Written by: TJ Ryan

Please note that these are a general explanation of the meaning of terms used in relation to credit cards.

Your bank or financial institution may use different terms, and you should read the terms and conditions of your credit card carefully to understand all rewards, features, fees and charges, and interest rates that may apply to your card.

You cannot rely on these terms when buying a credit card. Refer to the product disclosure statement (PDS) for the credit card you are considering and CANSTAR’s Financial Services and Credit Guide (FSCG).

Annual fee: A fee charged annually for the use of the credit card. Find out the average annual fees on credit cards.

Balance transfer: Transferring the outstanding balance on your credit card to another card, usually one with a better (lower) rate as part of a special promotion.

Balance transfer fee: A fee charged when you make a balance transfer. It may be a flat fee or a percentage of the amount you transfer.

Cash advance: Withdrawing cash from a line of credit, by using your credit card to get cash out from an ATM, buy foreign currency, buy traveller’s cheques, or pay a gambling debt. Usually incurs a cash advance fee and/or a higher interest rate.

Credit limit: The maximum amount you can spend with your credit card before having to pay off some of the balance. Find out how credit limits are determined.

Credit report or credit history: A report from a credit agency that contains a history of your payments on current and previous credit cards and loans. Lenders use your credit report to decide how likely you are to repay a future debt and whether or not to lend money to you. Find out what is included in your credit report.

Credit rating or credit score: A numerical score that represents your credit-worthiness, based on your credit repayment history. The score is based on whether you pay your bills on time, your current level of debt, the types of credit and loans you have, and the length of your credit history. Your credit rating is used by lenders when deciding whether or not to lend money to you. Find out how to check your credit rating.

Default: When a cardholder fails to make the minimum required payment on their credit card bill, loan, or other line of credit. Defaults are a serious black mark on your credit report and negatively affect your credit rating.

Interest rate: The rate at which your outstanding balance increases per month if your bill is not paid in full. Learn about how interest is calculated.

Interest-free days: The number of days you have to pay your bill in full before interest is charged on the outstanding balance. It is the period of time between the date of a purchase and when the payment is due. Learn about how interest-free days are calculated.

Introductory rate: An initial interest rate offered to entice new cardholders to sign up for a credit card. These rates usually begin low but revert to the standard rates after 6 months or so. Learn about introductory rates.

Minimum payment: The amount listed on your bill as the minimum your bank requires you to pay off your credit card balance for that month.

Penalty fees: Fees charged if you violate the terms of your cardholder agreement or other requirements related to your account. For example, your credit card company may charge a penalty fee if you make a late payment on your card or if you exceed your credit limit.

Pre-approval: An initial notification that a customer is likely to be approved for a certain credit limit if they apply for that type of credit card. This is based on the information the bank has about their credit history (as opposed to their official credit report), so it does not guarantee the customer will actually be approved if they apply.

Rewards program: Benefits that come from using a rewards credit card, in proportion to the amount of money spent. Rewards come in four main types: cash back, frequent flyer miles, merchandise (gift cards or general merchandise), and instant rewards (shopping discounts).

To view the full Credit Card Glossary of Terms, click here.

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As of March 2017, the credit card providers we research and rate include:

  1. ADCU (Australian Defence Credit Union)
  2. 28 Degrees Mastercard
  3. American Express
  4. ANZ
  5. Bank Australia (formerly bankmecu)
  6. Bank of Melbourne
  7. Bank of Sydney
  8. BankSA (Bank of South Australia)
  9. BankVic
  10. Bankwest
  11. bcu
  12. Bendigo Bank
  13. Beyond Bank
  14. Big Sky Building Society
  15. BOQ (Bank of Queensland)
  16. Citi
  17. Coastline Credit Union
  18. Coles
  19. Commonwealth Bank
  20. Community First Credit Union
  21. Credit Unions
  22. CUA
  23. David Jones American Express
  24. Defence Bank
  25. Diners Club Australia
  26. ECU Australia
  27. Encompass Credit Union
  28. First Option Credit Union
  29. G&C Mutual Bank
  30. GEM Visa Card
  31. GO Mastercard
  32. Greater Building Society
  33. Heritage Bank
  34. Horizon Credit Union
  35. HSBC
  36. Hume Bank
  37. Hunter United
  38. IMB Bank
  39. Intech Credit Union
  40. Jetstar
  41. Macquarie Bank
  42. Macquarie Credit Union
  43. ME Bank
  44. MYER
  45. MyState
  46. NAB
  47. Newcastle Permanent
  48. P&N Bank
  49. People’s Choice Credit Union
  50. Police Bank
  51. Qantas Credit Union
  52. QLD Police Credit Union
  53. QT Mutual Bank
  54. Qudos Bank
  55. SCU
  56. Select Credit Union
  57. SERVICE ONE Alliance Bank
  58. George Bank
  59. Suncorp Bank
  60. Teachers Mutual Bank
  61. Victoria Teachers Mutual Bank
  62. Virgin Money
  63. Westpac
  64. Wide Bay Australia
  65. Woolworths Money
  66. Woolworths Employees’ Credit Union (WECU)

You can compare credit cards from the providers we research rate using the comparison selector tool at the top of this page.

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