How to choose your first credit card

A credit card is a handy tool. It can be used worldwide, help you build your credit rating, cover you when you’re short on cash and be a valuable source of funds in an emergency.

As well as knowing all the benefits that can come with a credit card, it’s important to be across some of the conditions attached to a card too.

Here are some tips to help you make the most of your first credit card.

1. Find a card that suits your needs

Different types of credit cards have different benefits and may be better suited to different patterns of spending and repaying. Broadly, credit cards can be grouped into three categories:

• Interest-free: May best suit those who are new to credit and want more control over their finances. Interest-free cards generally offer a simple monthly fee based on the card limit so there are no complex fees and pricing structures
• Low fee: May best suit  those who are confident they’ll regularly pay off their balance in full as low-fee cards can attract higher interest rates than some other card types
• Low rate: May best suit those who carry a balance over from month to month and want to minimise the amount of interest paid on purchases. Low-rate cards have a higher annual fee than some other card types
• Awards: May best suit those who intend to pay off their balance in full each month and who want to make the most of their credit card spending by earning awards points that can be redeemed for reward items including gift cards, electronics, in-store purchases and cash back. Awards cards attract higher interest rates and annual fees than some other card types

You can use our credit card finder tool to help find a CommBank card that will suit you.

2. Know your monthly spending limits

You’ll want to avoid overspending and getting yourself into debt beyond your means at all costs. Before taking out a credit card, use our budget planner to assess how much disposable income you have each month that could be used to repay a credit card. Our credit card repayment calculator can help you figure out how long it would take to pay back your balance, based on what you can afford to pay.

You can choose to repay anywhere between your minimum due payment or your full balance each month, but the more you pay off the less interest you will be charged.

3. See how interest is calculated

Each credit card has different interest rates for different types of transactions, such as regular purchases, balance transfers and cash advances. The interest rate you’ll often see in advertising is the purchase interest rate, which is the rate you’re charged on purchases if you don’t pay your balance in full by the payment due date on your statement each month. Many credit cards come with an interest-free period, meaning you won’t be charged any interest on purchases you make during that period if you pay your closing balance in full by the due date every month. Interest-free cards don’t incur interest charges but may incur monthly fees.

4. Understand the fees and charges

With credit cards there are other charges in addition to interest rates to be aware of. Ensuring you make at least your minimum repayment by the due date each month will avoid late payment fees. Also be aware that if you withdraw cash with your credit card you'll be charged a cash advance fee as well as interest at the cash advance interest rate. Check out our standard fees and charges for credit card services.

5. Maximise the benefits

From complimentary international travel insurance to emergency assistance and extended warranty on purchases, there is a range of benefits that may come with a credit card. Different card types have different benefits, so check the type you’re interested in to see if it has the benefits you’re after. Remember, cards with lots of perks are likely to have higher annual fees and interest rates than other card types.