Australians love credit cards. In fact, there are over 12.5 million active cards in Australia, used for $22.25 billion in transactions per month*.

Credit cards are relatively easy to use and access but if not managed well, your card can become an expensive problem. After all, most of us have overspent at least once in our lives and regretted it when the bill came at the end of the month.

On the other hand, your card can also be a brilliant tool to manage your cash flow and earn rewards - if you know how to use it well.

Think about what you need

To get the most out of your credit card you need to ensure that you have the right one for your needs.

Credit cards can have dozens of different benefits, so it pays to think about what you want from yours. Some earn frequent flyer points and include travel insurance, while others give you discounted tickets to shows or movies.

If you’re not going to use these rewards, however, you may be better off with a card that doesn’t offer them as cards without extra benefits sometimes have lower interest rates and fees1.

Do your research

Once you know what you want from a credit card it’s time to do your research and look into the options available to you. Qudos Bank has three credit cards to suit a range of different spending habits - take a look at our credit cards here.

Here are a few things to consider while you research:

1. Fees: most credit cards have monthly or annual fees, and some charge fees for opting into particular rewards programs. Make sure you know what these fees are.

2. Interest rate: the average credit card interest rate in Australia is just under 20%2 At the time of publishing, Qudos Bank’s lowest rate card has a variable interest rate of just 12.34%p.a.3

3. Interest-free period: some credit cards feature interest free periods varying from 30 to 55 days after you purchase.

4. Introductory interest rates: some cards will include an introductory interest rate that’s lower for the first few months after you receive your card. Qudos Bank’s Lifestyle credit card features an introductory rate of just 4.99% per annum4 for the first five months.

Once you’ve done a little research weigh up the pros and cons of each card and choose one that’s best suited to your needs.

Set a limit

You don’t have to take the maximum credit limit you’re offered. If it’s too high and you’re worried you may overspend, you can always discuss lowering your limit with your card issuer.

It’s important to remember that your credit card limit can affect your borrowing power when it comes to applying for a loan.

Keep it simple

Multiple credit cards can be difficult to manage, causing you to overspend and pay more interest on your purchases. That’s why it’s usually better to keep it simple when it comes to your credit cards and stick to one; that way you’ll only have one bill to pay and one interest free date to remember (if applicable to your credit card).

You should also keep in mind that every time you apply for a credit card or miss a repayment it’s recorded on your credit score.

Manage your cash flow and spend mindfully

It’s always better to pay your credit card off in full before the relevant due date to avoid paying interest. To make sure you remember, set up a budget and stick to it. Spend mindfully to make sure you always have enough at the end of the month to fully repay your credit card.

It’s also a good idea to save up an emergency fund to cover unexpected costs such as car repairs or living costs if you lose your job. That way you won’t have to use your credit card to cover them and risk incurring interest.

Don’t make minimum repayments

Life happens and sometimes you’re unable to repay your credit card in full at the end of the month. If this occurs try not to fall into the trap of making minimum repayments as you’ll pay more interest in the long run and may struggle to fully repay your debt. Instead, consider paying as much as you can afford to minimise interest and settle your debt as soon as possible.

Credit cards are a double-edged sword. On one hand, they can be brilliant tools for managing your cash flow and earning perks like rewards points. But on the other they can enable irresponsible spending and high interest charges.

With that said, if you choose the right card and use it mindfully, you’ll likely maximise its benefits and avoid its pitfalls, leading to better financial wellbeing.

* RBA data, released July 2021.

The information on this page is of a general nature and is not intended to be a substitute for personal advice. This information has been produced without taking into account your personal financial circumstances, objectives or needs. You should consider the appropriateness of the information to your financial situation and seek personal advice before acting on any of this information. Qudos Mutual Limited trading as Qudos Bank ABN 53 087 650 557 AFSL/Australian Credit Licence 238 305.

Before opening a credit card account with us, you should read our Credit Card Terms and Conditions , Qantas Points Banking Rewards Terms (as relevant) and Financial Services Guide .

Published, March 2022