Is There Such Thing As The Best Credit Card?

February 4th, 2010

Discover the key points to consider that can make your search for the best credit card much easier. Understand how the various credit card features work, so you can make an informed decision.

2.9% p.a. for 12 months11.99% p.a.

This is an important question to ask when looking for the best credit cards. After all, which person wouldn’t want to locate exactly the right credit card considering the potentially far-reaching consequences of choosing poorly.

Well, according to the 2009 Australian Consumer Credit Card & Banking Survey, only 6% of people questioned could summon enough enthusiasm to visit a credit card comparison website. 58.8% only applied to their own bank for a credit card. This is clearly because banks, as evidenced by the worst economic crisis in living memory, have their customers’ interests at heart.

Okay, maybe not. Sadly, as the 6% figure demonstrates, very few people are willing to help themselves, so it’s not too surprising that banks take the same line. More bizarrely, when asked what was the most important factor in their choice of credit cards, the most popular answer was “to find the best deal”. By not bothering to compare? Well, good luck with that.

The best credit card for most people is obviously the one they obtain with the smallest amount of effort.

The best credit card for you, as you are clearly one of the 6%, should be based on how well-suited the following features are to your personal requirements:

The regular purchase interest rate (APR)

This is the interest rate you will pay on any unpaid balance left over from one month to the next. These can range from 10% to 20%, so if you’re not clearing your balance every month, or you think this may happen, then your best credit cards bet will be the one with the lowest rate.

Introductory interest rate on purchases

This is a low rate on purchases that applies for a certain period of time, usually three to six months. Although this is a great way to get a (very) short-term interest-free loan, you should not take your eye off the regular interest rate that will kick back in after the offer period. This is the rate you will have to live with, and the one that your previous purchases will be subject to if you haven’t cleared them in time.

Balance transfer offers

Making a balance transfer from another card is an effective and popular way to reduce your level of debt, and this might qualify a credit card as the best credit card. However, you need to match your level of debt to the length of the offer period, or the same situation as described above will happen – a higher interest rate will kick in on whatever debt is left over.

The annual fee

A no annual fee credit card is the best credit card for anyone who never leaves an unpaid balance from one month to the next. If you’re not paying any interest, then the interest rate doesn’t matter and you can happily accept the higher ones that often accompany a zero fee credit card.

Interest-free days

This is the period between your purchases and when your bill becomes due for payment. Most cards allow up to 55 days before payment is due, others only 44. This is a standard feature, so any card without this you might view as one of the worst credit cards.

Rewards programs

For some people, the best credit cards are those with the best rewards program. If these are free, you may as well get something back for your spending. However, research shows that if you have to pay a fee for one, most people actually end up out of pocket.

Editors Choice: Featured Credit Card Deals

	Interest Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual fee	Cash Advance Rate (p.a.)
Westpac 55 Day Credit Card	0% for 5 months (reverts to 19.59% )	3.99% for 6 months	$0	21.49%
Citibank Clear Platinum Card	11.99%	2.9% for 12 months	$99	21.74%