How to win the credit game

Take full advantage of cards while avoiding expensive traps and pitfalls

- Michelle Baltazar

Credit cards are back with a vengeance. Monthly purchases reached a record high of $33.5 billion in January, according to the latest report from the comparison site Finder. There are more than 13 million credit cards in circulation, with one in four Aussies admitting they can’t manage their finances without one.

While misuse and mismanagement of a credit card can lead to a downward spiral of indebtedness, there are some things you can do to avoid the fees and stay in the black. Banking rules introduced in 2019 are designed to curb over-borrowing, with tighter rules on credit limits, balance transfers and charges.

Despite these, many users can be caught out by living well beyond their means: only 8% of respondents in a Finder credit card survey said that their application had been rejected.

If you are thinking of getting a new card, here are some factors to consider to help pick the right one.

Have you calculated the fees?

Once upon a time, credit cards charged a flat annual fee that you had to pay regardless of how often you used them. With stiff competition from buy now, pay later (BNPL) schemes, the big four banks have launched a new type of card that rides off the BNPL model.