From the features to look for in a credit card to eligibility requirements, here’s everything you need to know about a credit card application.

1. Consider if you should get a credit card in the first place

If you’re reading this, you’ve probably already decided to get a credit card. But before you go signing away on the dotted line, there are a few things you should consider first, such as why you want one in the first place.

Credit cards aren’t the devil, despite how often they’re referred to as exactly that. They can be a great cash flow tool – provided you manage them properly.

If you’ve already got a spending problem, applying for a credit card probably isn’t the best idea ever. Credit cards can be okay to use if you religiously pay them off every month – but a lot of people struggle to do this, and wind up falling into debt as a result.

Pros and cons of credit cards

Credit card pros Credit card cons
  • You can take advantage of interest-free days, provided you pay off your balance in full before the statement period ends.
  • They’re safer than carrying cash, as cards can be cancelled quickly if you lose your wallet.
  • You can earn rewards points when you spend.
  • Credit cards work in any currency (although currency conversion fees apply).
  • Credit cards come with complimentary extras,like travel insurance, purchase protection, and extended warranty insurance.
  • They’re a financial safety net if you don’t have enough cash or savings to cover any unexpected or emergency costs that arise.
  • They can be easier for pre-authorisation when hiring a car or checking into a hotel.
  • They make impulse spending easy. People can get easily carried away and spend money they don’t have, and fall into debt.
  • There’s the risk of credit card fraud.
  • If you fall behind on your monthly repayments, it could damage your credit rating – which may make applying for a loan harder.
  • Credit cards come with annual fees.
  • Accessing cash can be expensive. If you want to make a withdrawal it could attract a cash advance fee of 3% of the total transaction amount. It also typically attracts an interest rate of between 19-22% immediately.
  • Credit card surcharges.
  • If you carry a balance from month-to-month, you’ll pay high interest charges. If you can’t meet your monthly repayments, you can end up paying hundreds or thousands more than you initially charged in interest.

2. Pick the right card for you

Before applying for a credit card, it’s important you do your research to find the one that best suits your needs. The most important thing is to pick a card that you can afford. 

If you’re a low to middle income earner, a card with low or fees or a low interest rate is probably the best option for you. If you’re a high-spending baller, a credit card with higher limits may suit. 

Credit cards shouldn’t be confused with debit cards, which are the cards you use to access existing funds in your bank account. 

In short, you should be considering these three things when looking for a credit card, which we’ll cover in more detail below:

  • The type of card
  • The annual fees
  • The interest rate

How to choose your first credit card

Low rate cards 

Low rate credit cards are for consumers who want a credit card with a low interest rate and flexible repayment conditions.

They may suit you if you’re new to credit cards, or if you:

  • Use your credit card for everyday spending.
  • Regularly make big purchases.
  • Only make the minimum monthly repayments.
  • Struggle to pay off the closing balance at the end of the month.

Low fee cards

Low fee credit cards have low ongoing fees, while some have no ongoing fees at all, so you won't pay much if anything for yearly ongoing account maintenance.

However these cards usually attract a higher interest rate to compensate.

Low fee cards may suit you if you:

  • Usually pay off the balance in full at the end of each month.
  • Don’t use your credit card very often, or make big purchases with it.
  • Aren’t interested in rewards schemes.

Frequent flyer cards

Frequent flyer cards allow you to redeem points for flights, and may suit you if you: 

  • Pay the closing balance in full every month.
  • Want to earn points that you can use on both domestic and international flights.
  • Are a member of a frequent flyer scheme and want to boost your points balance.

Premium cards

Premium credit cards are for consumers who are after a card that comes with extensive benefits beyond a standard credit card’s offerings.

You may want to consider taking out a premium credit card if you:

  • Want all the fancy features of a Platinum card, such as travel insurance, inconvenience cover if your domestic flight gets cancelled, price protection cover and extended warranty. 
  • Pay off the closing balance at the end of every month.
  • Want to earn rewards points.

Rewards cards

If you want to be rewarded for spending money, rewards cards may let you do just that. 

They’re good for people who:

  • Pay off the closing balance in full every month.
  • Want to earn points that can be redeemed for gift vouchers, cashback, merchandise, or travel agents.
  • Aren’t fussed about redeeming points through frequent flyer programs.

Annual fees

Credit cards often charge annual account keeping fees once a year for the benefits that come with your card. Generally speaking, the higher the annual fee is, the more benefits that come with the card.

Paying an annual fee isn’t necessarily a bad thing – sometimes it’s just a necessary evil of having the card you want. Just make sure the benefits of your credit card are worth paying the fee. 

There are also a range of other common credit card fees, which you can read about in more detail here.

Interest rates

Interest rates are a fee that’s charged whenever you borrow money. When you use a credit card, you’re basically borrowing money from the account’s credit limit – so like with any other loan, interest may be charged on the balance. 

How and when this interest rate is charged can affect the amount you’ll pay to use the card. 

With credit cards, interest rates are calculated as a percentage of your balance and shown as an annual or per annum figure. Most credit cards have different interest rates for different types of transactions. The most common are purchase rates and a cash advance rate. 

Read more about how credit card interest works here.

3. How to apply for a credit card

Once you’ve identified the right credit card for you, the next step is applying for it. These days, most credit card providers will allow you to apply for a credit card online. But it’s not as easy as just ticking a box and away you go because credit card issuers have an obligation to lend responsibly.

Unlike buy now, pay later platforms, you’ll need to prove that you actually have the capacity to make the repayments for a credit card. As a result, credit card issuers have to take a bit of care when assessing your application, which means the process can be tedious; background checks and copious amounts of information may be needed before you can be approved.

At what age can I get a credit card?

To get a credit card in Australia, you must be at least 18 years old.

Eligibility criteria for applying for a credit card

You’ll need to meet several eligibility requirements, including the following:

  • Be over the age of 18.
  • Be an Australian citizen or a permanent resident.
  • Meet the income requirements.
  • Not be bankrupt.
  • Have a good credit score.

You’ll need to meet the income requirements so the banks know you can actually afford to pay off the credit card you’re applying for. Minimum income requirements generally start at $15,000 annually, and can go up to $100,000 for some of the most prestigious credit cards. 

What you need to open a credit card

To apply for a credit card, you’ll generally need to supply the following information:

  • Your personal details:This includes your full name, date of birth, Australian citizenship status or residency, contact phone number, email address, and your residential address. You may also be asked how many dependents (children) you have.
  • Identification: You will need to provide a valid form of ID, such as your driver’s licence, your passport, birth certificate, or Medicare card. After the initial application is submitted, you may be asked to provide certified copies of these documents.
  • Employment details: You may be asked to provide details of your employment, including your profession, your employer’s name and their contact details, as well as your salary. You may also be asked to provide recent payslips to verify your income. 
  • Other financial details: This may include your tax file number and any other forms of income, such as Centrelink payments, and any assets like shares or savings. You might also be asked to provide details of your monthly financial obligations, including payments for rent, mortgage and other living expenses (such as groceries, bills and fuel). 
  • Card details: During the application, you may also be asked to provide details about the card, including the credit limit, if you want to be told about other promotions, or whether you want to share the credit card with someone else.

What you shouldn’t do when applying for a credit card

When you’re applying for a credit card, the most important thing is that you know you can meet the eligibility criteria beforehand. Don’t apply for a credit card that is well above your means. Look for one that has a suitable credit limit, interest rate and fee structure for your circumstances. 

The worst thing you could do on your credit card application is to lie. If you have a large outstanding loan or massive debt from other credit cards, your credit card application will likely be rejected. Even worse – if you somehow manage to get approved and the banks find out you lied later on, you could even get done for credit card fraud and possibly go to jail. Yikes.

Another important thing to keep in mind when applying for credit cards is not to apply for dozens of credit cards. Every application is recorded on your credit history. Too many applications in a short space of time may lower your credit score and the lower your score is, the harder it could be to be approved for a credit card, or any other type of loan.

Savings.com.au’s two cents

People generally fall into two camps when it comes to credit cards: they either love them or hate them. At Savings.com.au, we’re of the belief they can be a great financial tool so long as they’re used responsibly. 

If everything goes swimmingly and you’re approved for a credit card, you may be tempted to go on a wild spending spree – but it’s important to remember that credit cards are not ‘free money’, nor are they a bottomless pit of funds. You have to pay back all the money you’ve borrowed eventually.

Spending money you don’t have is never a good idea – especially large amounts of money. With credit cards, it’s better to walk before you run, so stick to using just one at first. 

Use your credit card responsibly: make regular repayments, stay within your budget, and whatever you do, don’t share your credit card information!

Article first published June 6, 2019. Updated December 1, 2020.