How to apply for a credit card

At some point in your life, whether it’s in your late teens, early 20s or later, you might decide you are ready to get your first credit card. So what steps are involved when you apply?

Taking out your first credit card can be a milestone in your financial life. A credit card could help you manage your cash flow and give you added perks like frequent flyer points, cashback rewards or even complimentary travel insurance. That said, credit cards can be risky and can come at a high cost if not managed responsibly. It’s important to choose your credit card wisely and make sure you can make your required repayments, while paying down your balance to avoid high interest charges. If you’re unsure if you can manage a credit card, it may be wise to stick to a debit card.

How to apply for a credit card

You can generally apply for a credit card online, in person at a branch or over the phone. To apply successfully, you will need to meet the credit card provider’s eligibility criteria and provide them with information to show you can make the repayments. Generally speaking, there will be a number of key steps when it comes to applying for a credit card. These details will be covered in detail in this article, but in brief, the steps you’ll need to take in the credit card application process are:

1. Compare your credit card options: See what’s on the market that might be suitable for you, taking into consideration the interest rate of the card, and any upfront or annual fees that may apply
2. Check the card’s eligibility requirements: Credit cards in Australia will commonly have basic eligibility requirements like age and residency status, while some will have more specific requirements related to income or credit history.
3. Gather your financial information: When applying for a credit card, you’ll need to supply ID documents and generally also information about your employment (including recent payslips), and any assets and debts you currently have.
4. Complete and submit your credit card application: This can typically be done online or over the phone, once you have gathered the necessary documentation to apply.

Many providers offer ‘instant’ approval if you apply for a credit card online. Usually, this means you will get a response within 60 seconds of submitting your application. This is not guaranteed approval. Instead, your application will usually be conditionally approved subject to your information being verified.

After you’ve applied for a credit card, the provider will then assess your application and will usually conduct a credit check. If you are approved, you will usually receive your card within five to seven business days. You can then activate your card and use it.

Am I eligible to get a credit card?

To get a credit card, you will typically need to:

• be 18 years old or over
• be an Australian citizen, permanent resident or hold an eligible visa
• have a good credit history
• meet any minimum income requirements specified

It’s a good idea to check your credit score before you apply for a credit card. You can check your credit score for free with Canstar. Make sure you have checked carefully if you meet the eligibility criteria before applying for a credit card, as a declined application could damage your credit score.

How can I get a credit card if I am under 18?

You will only be eligible for a credit card if you are 18 years old or over. As an alternative, you may be able to become an additional cardholder, such as on a parent or guardian’s credit card. You will typically need to be at least 16 years old.

As an additional cardholder, you will get your own credit card with your name on it. However, it will be under the same account as the original cardholder and they will be responsible for the transactions made.

What details do you need to provide to get a credit card?

Credit card providers will ask you to provide information to prove your identity and establish your creditworthiness. You will typically need to provide the following details:

• An Australian driver licence number (if you have one)
• Employment and income information, such as payslips or bank statements
• Details of your existing liabilities (debts), such as personal loans and buy now pay later services
• Details of your expenses, such as rent, food, bills, transport, childcare and education
• Details of your assets, such as savings or a car or home you own

If you are an existing customer, some of your information may already be on file.

How do I choose my first credit card?

When choosing your first credit card:

1.  Consider your spending habits and whether you are realistically able to pay off your credit card each month.
2. Choose the type of card that suits what you believe your spending and repayment habits will be, There are a few different types of credit cards that Canstar’s rates as part of our Credit Card Star Ratings:
   • Low fee – this may suit you if you think you can pay your credit card balance off in full each month (and can therefore avoid interest charges) and want to save on fees.
   • Low rate – this may suit you if you don’t think you will pay your balance off in full every month as it will reduce the amount of interest you pay on purchases. Some providers also offer interest-free credit cards, but you may be charged fees.
   • Rewards and frequent flyer – this may suit you if you think you will pay your balance off in full each month and want to earn rewards or frequent flyer points. You may also get other perks like complimentary insurances. Rewards and frequent flyer credit cards typically have higher interest rates and annual fees than other credit cards, so you’ll need to work out if the benefits outweigh this.
3. Compare individual credit card products. Canstar compares credit cards based on factors such as:
   • the interest rate
   • the number of interest-free days on offer
   • the annual or monthly fee
   • the benefits and rewards on offer
4. Choose a credit card that most closely fits your needs, and apply.

As with any financial decision, it’s important to research the options thoroughly, read all important documentation, such as the Target Market Determination (TMD) and the Key Facts Sheet (KFS), compare your options and weigh up your needs against the pros and cons of the products you are considering.

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