Which credit card to get? Help appreciated =D

ChadHominem on 14/05/2011 - 18:14

Hi guys, I'm a complete credit card newbie and I just thought I'd reach out to you guys for advice because well…we ozbargainers are generally good with money right? (in most cases =D)

I'm 22, never owned a credit card and don't have a significant savings. I've been using my debit card for a few years but I've read that credit cards are generally better for internet security and exchange rate. Since I do a lot of online shopping I thought it might be about time to get one.

I would mainly use the card for online purchases, so exchange rate is important, as well as being a widely accepted card. Also I will only be making purchases which I can afford at the time, but I would still like a low interest card just in case the worst happens!

So I'm looking for the general things;

  • low interest rate
  • no/low annual fees
  • no/low surcharge
  • long (≤55 days?) interest free period

And additionally:

  • Good exchange rate when purchasing in other currencies (a must)
  • Extended warranty on purchased items (if possible)
  • Any other bonuses are a plus

If you know or have a card that is like this all help would be appreciated! Also if there's anything (t&c, hidden fees etc.) that I need to watch out for, so I don't end up in debt.

And just some final questions if anybody knows..

  • What is a balance transfer rate? Is it a charge for transferring my money to pay for the card or something?
  • Is there any advantage to having a savings account and credit card at the same bank? For quick transfers and stuff?

Thanks!

Financial

Comments

  • issh on 14/05/2011 - 18:39

    This may help get you started

    • ChadHominem on 14/05/2011 - 20:42

      damn, i didn't even realise ozbargain had that section.
      thanks!

  • JTL on 14/05/2011 - 20:02
    +3

    The problem with buying things online in another currency is that most credit cards will charge you a foreign transaction fee that is a few % of your purchase price.

    The 28 Degrees Mastercard (http://28degreescard.com.au/) has no annual fee and does not charge you any fees for purchasing in another currency. The exchange rate is also really good and close to what the bank rate is.

    • grasstown on 14/05/2011 - 20:26

      Yep no annual fee, 55 days, MasterCard ( so accepted everywhere)

    • ChadHominem on 14/05/2011 - 20:44

      awesome! i will check it out.
      anything that i should watch out for (as a newbie)?

      • Tal_Shiar on 14/05/2011 - 21:48

        interest rates for when you dont pay off your total bill

        • ChadHominem on 14/05/2011 - 22:17

          Oh yeah, but shouldn't be a worry.
          Just curious though, the 'per annum' interest rate. Is it the same rate monthly?
          For instance, the rate is around 20% p.a. so if one month i don't pay off the full balance do i rack up 20% interest on top of the balance?

        • llama on 14/05/2011 - 23:02

          If the interest rate is 20%, then you are charged 1/12 of that monthly on the oustanding balance. So, it would be 1.66666% per month.

          This is complicated to keep track of since most (not all) credit cards have a interest-free period, and your multiple purchases "age".

          Keeping a balance owing and only paying the same amount as you spend (plus interest) effectively means that you are paying full interest on the entire amount. This is an expensive way to borrow.

        • ChadHominem on 14/05/2011 - 23:23

          hi llama, i didn't quite get that about multiple purchases ageing. do you mean outstanding purchases from previous months?

          i've read a bit about credit cards today, my understanding so far is that:

          anything purchased since your last bill was issued contributes towards the bill for the next month. and you have until the due date of that bill to pay it all off..and that period is called the interest-free period right?

          so the interest-free period is just [remainder of the month till next bill + a certain number of days till the due date of that bill] which can be up to 55 days depending on the bank.

          the bill is just the amount of money that you have spent/withdrawn on that card during that time (plus any hidden fees for doing so). if you pay off the bill in full then there is no interest at all, if not then 1.66666% interest is added to the outstanding amount, which carries over to the bill for the next month.

          is that all correct?

        • joannatan on 15/05/2011 - 01:55

          hi dave, once you missed the due date of your credit card. they credit card issuer will start charging any outstanding balance on your cc. if this is happening and you want to stop the credit company charging you interest. you have to ask payout figure, then you pay that payout figure, wait until the end of billing cycle, then on the first day after billing cycle you can start using again to get interest free for purchase (vary between credit card issuer, in between 44 days to 60 days)

          example you got your bill and it appears outstanding balance $1k and interest rate around 20%/pa, and minimum $10/month (may be not accurate, this is only an example). in the past, when i still worked with one of the credit card company, it takes 7 years for the customer to pay off this $1k initial outstanding balance, with assumption that client didn't use their cc at all.

        • retiredfeline on 15/05/2011 - 09:31

          It's actually worse than what you think. If you fail to pay within the interest free period, the interest is charged backdated to the date of purchase. It won't do to pay just what's on the statement because you have racked up more interest by the time you realise you have missed the payment. What you have to do is pay more than the statement amount to put you in the black again. Any leftover will then offset purchases made after the statement.

          Also you will get whacked with a "late payment fee" by some cards. There is a class action trying to fight unreasonable amounts charged here.

          As a normal precaution, I put a recurring entry in my electronic diary to check my statement the same day each month. Especially now that statements are electronic, there's nothing on the desk to remind you.

    • scotty on 14/05/2011 - 22:51
      +3

      Yeah 28 Degree Mastercard would be a "must" of any serious ozbargainers who shop overseas. Anyone know whether there's an equivalent for business credit card?

      • timhn on 15/05/2011 - 11:11

        Yep, it's also the choice of overseas travellers. Zero foreign transactions make it easy to withdraw ATMs from overseas. The exchange rate is also very good - much better than others.

        • JTL on 15/05/2011 - 12:38

          Watch out if you're using your credit card to withdraw cash from ATMs though - they could slap on a cash advance interest rate which is upward of 20% p.a.

        • retiredfeline on 15/05/2011 - 21:41

          Put some money into the account before withdrawal as explained below.

      • overlook on 15/05/2011 - 11:17

        agreed

        • timhn on 15/05/2011 - 13:04

          Top it up before you go. That was what I did before my last trip to NZ. Have 2 CC, one for me and one for my partner. We used one for ATM cash withdraw and the other for the rest of other payments (accom, food, car rental etc).

        • ChadHominem on 15/05/2011 - 13:56

          timhn, do you only get cash advance charge if you withdraw more cash than you have in your account?
          so if you have $1000, withdraw $1000 in cash, no charge right?

        • overlook on 15/05/2011 - 17:40

          there will be no charge if your cc is loaded with your own money. Say you loaded $1000 on top of your $1000 credit limit. you can only withdraw $1000 for free.

        • joannatan on 15/05/2011 - 21:31

          who is your cc provider timhn?

        • dkslim on 15/05/2011 - 21:38

          If you have credit limit of $1000, and you load it with $5000 your own money, can you withdraw $5000 for free? Or is it limited to $1000?

        • retiredfeline on 15/05/2011 - 21:41
          +1

          You can withdraw up to $6000. Naturally the last $1000 will attract interest from day one.

        • overlook on 15/05/2011 - 22:31

          $5000 fee free. last $1000 will cost you the whatever fee/interest as cash advance.

  • timhn on 16/05/2011 - 09:52
    +2

    Re mrdavedave: $0 charge at all if your balance is in +ve after the withdrawal. Note that there will be a ATM fee(like $1 or $2, it's the charge from the ATM provider, not from your CC provider). So just make sure you don't hit too close to your limit. To be honest, I had never withdraw the full amount of my topup $$ anyway. When I returned to Aus, if it was a small amount, I simply use it for groceries. If I have more than $50 surplus in CC, I can withdraw from a Westpac's ATM which charge no fee at all.

    Re jonnatan: 28 Degrees
    https://28degrees-online.gemoney.com.au/access/cards/28Degre…
    They were call Wizards Master Card couple year back.

    There is a huge discussion about this at Whirlpool.

    • Derrick Crane on 16/05/2011 - 10:14

      Thoroughly endorse timhn's comments.
      Usually if something appears too good to be true……….

      ……….however I have been using Wizard/28 Degrees Mastercard for foreign currency transaction for several years and I recommend it.

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