Staying on top of family finances can mean plenty of reaching for your credit card. Whether that’s to pay for bills, to cover childcare costs, or to build up rewards points, there are plenty of reasons a credit card could come in handy when you’re a parent.
There are a huge variety of credit cards on the market in Australia, but finding the right deal for your family can be a tricky balancing act. Thankfully, with so many cards to choose from, there are some standouts to keep your eye on.
With credit cards, it is important to find the right option for you and your family’s spending needs. The wrong credit card can lead to high interest rates, expensive fees or snowballing debt. The key lies in knowing what you need from a card, and what type of card can help you achieve it.
If you have existing credit card debt you’re looking to clear, there are Balance Transfer credit cards offering up to 36 months to pay down your balance. These cards will offer a lower interest rate on the balance you transfer over, reverting to a higher interest rate after the promotional period.
If you’d like to use rewards points to your family’s benefit, you can choose from a wide range of cards. There are a lot of great rewards credit cards and frequent flyer cards on the market, many of which can help you earn cashback as you shop or score you points to use on flights and accommodation for those family holiday plans.
For parents more interested in keeping costs down long-term, there are also cards offering eye-catching low rates. These could be helpful with the rising cost of living, to help prevent sky-high interest being added to your credit card balance.
Take a look at some of the top offers for family credit cards in Australia this month.
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What types of credit cards are available for families?
There are a few types of credit cards commonly seen in the Australian market, but it’s important to find the one that suits your lifestyle as a parent. Some of the credit cards to familiarise yourself with are:
- Rewards credit cards – These credit cards often have higher purchase rates and annual fees in exchange for perks and rewards schemes. They are often linked to a specific points program, like Qantas Frequent Flyer or Virgin Velocity, and will offer a certain rate of points earned per $1 spent. You can use these to bring down your family’s holiday costs, or sometimes in exchange for cashback rewards.
- Low rate credit cards – A credit card with a purchase rate below 14% p.a. is generally considered a low rate credit card. This means that if you carry a balance over at the end of the month, it will attract a smaller amount of interest. This can be useful if you tend to leave a larger balance on your credit card, or to not pay off your account in full. These may be good starter options for young adults, since interest accumulates at a lower rate.
- Balance transfer credit cards – These credit cards are designed for those looking to clear an existing credit card balance. They offer a low rate on a balance transferred over to the card, often 0% for an introductory period. It’s important to know what the introductory period is, as afterwards you may end up paying a much higher rate on any outstanding balance.
- No annual fee cards – If you tend to pay off your balance each month, there are also credit cards with no annual fees which could keep your costs even lower.
You might also hear people talk about interest free credit cards. These tend to refer either to introductory offers for cards where you can score a 0% p.a. purchase rate, or credit cards that charge no interest and instead have a monthly fee that varies depending on their credit limit.
What are the top features I should look for in a credit card?
Whether you’re a big or a small family, the features to look for in a credit card will vary depending on what you need from your credit card. Some things to watch for will be:
- Interest free days – Most credit cards will have between 44 and 55 interest free days, a timeframe that starts at the beginning of your billing period in which you can pay off purchases without attracting interest. Some cards even extend this interest free period further. If you do not pay off your balance within one billing cycle, you won’t receive the interest free days for the next one.
- Complimentary insurances – Some credit cards will have certain insurances attached, which can be a handy feature. These can include extended warranty, purchase protection, price guarantee, international travel insurance, and transport accident insurance. You might want to double check if the insurance provided by your credit card also covers your spouse or children.
- Travel perks – Along with travel insurance, certain cards (especially rewards cards and frequent flyer cards) may offer perks for travellers. These can include access to airport lounges or extended interest-free periods on flight bookings. Remember that often these perks are only granted to the primary cardholder, and you may not be able to bring your kids into the members lounge – check ahead of time!
- 0% foreign exchange margin – Many credit cards will charge a 2%-3% fee on top of the exchange rate on foreign transactions. If your family travels frequently, you could save a considerable amount by opting for a card with no foreign exchange margin.
- Rewards – While rewards credit cards are obviously known for their perks, many cards offer advantages to their holders. You may be entitled to higher rates of points during certain periods, discounts at certain venues, cashback offers, and more.
- Extra cardholders – Some credit cards will allow you to add extra cardholders for a small charge or no added fee. This can be helpful for families with shared finances, allowing you to build points faster or share expenses.
Of course, the features you are after will all come down to what you are using your card for. If you are after a card that keeps cost down, the waiving of a first year fee might be an attractive feature!
What are some of the common fees for a credit card?
When looking at credit cards for your family’s needs, it’s important to be aware of the fees that can come along with them. Some common credit card fees to watch out for include:
- Annual fee – While some credit cards may waive the annual fee in the first year, this is a fairly standard fee for a credit card. These can range from absolutely nothing, all the way up to $1,200. Generally, a card with more perks and rewards will tend to have a higher annual fee.
- Late fees – You can expect to pay a fee if you’re late on making the minimum payment on your credit card, so pay attention to those due dates.
- Minimum repayment – While you would ideally be paying off your balance in full every month, you’ll notice something called the “minimum payment” or “minimum repayment”. This is either a flat fee or a percentage of your balance owing and represents the absolute minimum you will need to pay to avoid attracting extra fees.
- Interest – Any balance not paid each month will attract interest at the purchase rate of your card.
- Rewards program fees – Certain rewards cards may also require you to pay a fee to be a part of their rewards program. This may mean the annual fee for a Frequent Flyer or Velocity membership, for example.
There can also be other fees attached to your credit card, such as fees for making foreign transactions and fees for making cash advances.
How do I apply for a credit card?
The credit card application process will vary depending on the card you are applying for and where you are applying.
Speaking generally, applying for a credit card will involve an assessment of your credit history and credit score. This will take into account any existing debts or past credit card utilisation to help determine your creditworthiness for the provider.
You will have to supply a provider with enough points of identification to verify your identity, as well as proof of income and employment (which tends to be via payslips and bank statements). Certain cards will have earning requirements, and may require a statement from your employer.
If you are applying for a credit card with your current main bank, you may be able to skip much of the documentation process, as they already have a lot of your information on record. In some cases you may be pre-approved for certain credit cards. To apply for credit cards with higher credit limits or salary requirements, you may need to undergo an additional application process.
What are the top tips for using a credit card responsibly?
Using your credit card responsibly comes down to knowing your own limits and ability to make repayments. A big part of the battle is making sure that you choose the right card for you and your family. Other than that, there are some simple tips you can stick to in order to make things that little bit easier.
- Only spend money you have – Don’t treat your credit card as free money, because it is money you will need to pay back. Overspending can very easily lead to credit card debt.
- Pay your bill in full – As tempting as it is to make the minimum repayment on your credit card bill, paying the full balance will preserve your interest-free days and prevent any remaining balance from attracting interest.
- Check your statements – You should always be wary of unrecognised charges. Not only do you have to watch for credit card fraud, but also for unauthorised purchases within your own home (especially if you have your details prefilled on any family devices).
- Avoid taking out cash – A higher cash advance rate will be charged for withdrawing cash and making cash transfers, and there’s no interest-free period here!
- Regularly check your card still suits you – Financial circumstances change, and so do special offers. There’s no reason to get locked in with a card that doesn’t suit you, so make sure you’re regularly reviewing your options and finding the option that’s best for you.
- Only give additional cards to trusted holders – Additional cardholders can help in building rewards points to put towards some family or even parent perks, but they can also end up damaging your credit score. If you don’t trust your child’s spending habits, don’t give them cardholder status.
Ask for help when you need it – If you feel debt beginning to get overwhelming, it’s best to do something about it sooner rather than later. Contact your provider, who may be able to provide you with assistance, and seek help from the National Debt Helpline.
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Sara Borman is a money writer for financial comparison website Mozo and contributor to GoodtoKnow. She is ASIC RG146 (Tier 2) certified for general advice. She is Mozo’s expert on credit cards, BNPL, and personal finances. Her creative and academic writing has appeared in publications in Australia and the USA.
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