Credit cards for first timers

No idea where to begin? These cards have low fees or low interest rates and should give you a good starting point to build up your credit history.

By   |   Verified by David Boyd   |   Updated 27th August 2020

Comparing credit cards for first timers

St.George Vertigo Visa

On St.George's website

Apply by 30 September 2020

St.George Vertigo Visa

Balance transfer

22 months at 0% p.a.

Purchase rate

7 months at 0% p.a.

Annual fee

$0.00 for 1st year

Highlights

  • 0% for 22 months on balance transfers with 1.5% balance transfer fee. Reverts to cash advance rate of 21.49% p.a.
  • 0% p.a. on purchases for up to 7 months from card approval (reverts to 13.99% p.a. thereafter).
  • $0 p.a annual fee for the first year ($55 p.a. thereafter).
Bendigo Bank Low Rate Mastercard

On Bendigo Bank's website

Apply by 30 September 2020

Bendigo Bank Low Rate Mastercard

Balance transfer

6 months at 0% p.a.

Purchase rate

11.99% p.a. ongoing

Annual fee

$0.00 for 1st year

Highlights

  • No annual fee for the first year ($45 p.a. thereafter).
  • Receive a $150 Woolworths Supermarket Gift Card when you spend $1,000 on eligible purchases within 60 days of account opening.
  • 0% p.a. on balance transfers for 6 months. Purchase rate of 11.99% p.a. applies thereafter.
Bankwest Zero Mastercard

On Bankwest's website

Bankwest Zero Mastercard

Balance transfer

9 months at 2.99% p.a.

Purchase rate

17.99% p.a. ongoing

Annual fee

$0.00 p.a. ongoing

Highlights

  • Pay no annual fee as long as you hold the card.
  • 2.99% p.a. for 9 months on balances transferred. Reverts to 17.99% p.a. thereafter.
  • Up to 55 days interest-free on purchases.
Bendigo Bank Low Rate First Mastercard

On Bendigo Bank's website

Bendigo Bank Low Rate First Mastercard

Balance transfer

6 months at 0% p.a.

Purchase rate

11.99% p.a. ongoing

Annual fee

$29.00 p.a. ongoing

Highlights

  • Low 11.99% p.a. purchase rate.
  • Exclusive for customers 18 to 25 years old.
  • 0% p.a. on balance transfers for 6 months. Purchase rate of 11.99% p.a. applies thereafter.
Bendigo Bank Low Rate Platinum Mastercard

On Bendigo Bank's website

Bendigo Bank Low Rate Platinum Mastercard

Balance transfer

6 months at 0% p.a.

Purchase rate

11.99% p.a. ongoing

Annual fee

$89.00 p.a. ongoing

Highlights

  • Enjoy 0% p.a. for 6 months with 0% on balance transfers.
  • Low-interest rate of 11.99% p.a.
  • Low annual fee of $89 p.a.
Westpac Low Rate Credit Card

On Westpac's website

Apply by 02 December 2020

Westpac Low Rate Credit Card

Balance transfer

20 months at 0% p.a.

Purchase rate

13.74% p.a. ongoing

Annual fee

$59.00 p.a. ongoing

Highlights

  • Enjoy 0% p.a. for 20 months on balance transfers with a 1% balance transfer fee. Reverts to variable cash advance rate of 21.49% p.a.
  • Plus, get $200 cashback when you spend $1,000 on eligible purchases within 90 days of card approval.
  • Enjoy up to 55 days on purchases.

Finty Rewards

  • Get $50 cashback when you apply via Finty and are approved
Bankwest Breeze Mastercard

On Bankwest's website

Bankwest Breeze Mastercard

Balance transfer

9 months at 2.99% p.a.

Purchase rate

15 months at 0% p.a.

Annual fee

$49.00 p.a. ongoing

Highlights

  • 0% p.a. for 15 months on purchases (reverts to 10.99% p.a. thereafter).
  • 2.99% p.a. for 9 months on balance transfers with no balance transfer fee (reverts to 10.99% p.a. thereafter).
  • Low annual fee of $49 p.a.
  • Limited time only. Fees, T&Cs apply. New Breeze Mastercard customers only.
Bankwest Breeze Platinum Mastercard

On Bankwest's website

Bankwest Breeze Platinum Mastercard

Balance transfer

9 months at 2.99% p.a.

Purchase rate

15 months at 0% p.a.

Annual fee

$69.00 p.a. ongoing

Highlights

  • 0% p.a. for 15 months on purchases (reverts to 10.99% p.a. thereafter).
  • 2.99% p.a. for 9 months on balance transfers with no balance transfer fee (reverts to 10.99% p.a. thereafter).
  • Low annual fee of $69 p.a.
  • Limited time only. Fees, T&Cs apply. New Breeze Platinum Mastercard customers only.

Overview

A credit card provides you with a line of credit from a bank or other lender. It can smooth out the peaks and troughs in your budget, give you a convenient way to make payments all around the world, act as a safety net if you have unexpected expenses that you can't afford to pay immediately, and even improve your credit score if used responsibly. So it can be a good idea to have one.

But getting a credit card for the first time can be a challenge.

Credit history and credit score

Credit cards are more readily accessible when you have an established credit history with a proven track record of repaying on time. A credit card first-timer is handicapped as their history of loan repayments may be non-existent or very limited, and therefore may not provide a lender with the evidence of satisfactory credit management in the past. All lenders tend to take the view that the best predictor of future account conduct is past account conduct. Without a credit history to consider in your application they have limited information on which to base their decision. But your past payment record in other areas may help. If you are unsure of what your credit report contains, you can check it here.

Payment record

If you have used credit of any kind (such as a car loan) in the past and didn’t default on payments, your credit card application request will probably have a better chance of success. A landline telephone account, internet provider account, postpaid mobile phone account, gas or electricity account, can all help to establish your credit history if they are in your name.

Interest-free days

Credit cards allow you to use the card provider's money without paying interest for a number of days, as long as you always repay your account balance on full on or before the payment due date. The number of interest-free days is typically expressed as 'up to 44 days interest free' or 'up to 55 days interest free'. What this means is that if you were to make a purchase on the first day of your monthly billing cycle, you would be able to repay the purchase amount to the bank 44 or 55 days later, without incurring interest charges. On the other hand, if you were to make a purchase on the last day of your billing cycle, you would have only around 14 or 25 days of interest-free credit before payment was due.

Failing to repay your monthly balance in full means that you lose your interest-free days in the following month, and any new purchases will incur interest from the transaction date until the date you pay the bank for them.

Interest rates

Most credit cards will list two interest rates – the purchases rate and the cash advance rate. The purchases interest rate is applied to any purchases balance carried over from the previous month, when you have not repaid your account balance in full. The cash advance rate is applied to any cash withdrawals you make from your credit card account, either over the counter or at an ATM. There are no interest-free days on cash advances, so they always incur interest charges from the day you receive the cash until the day you make full repayment.

Not all credit cards permit cash advances. American Express cards, for example, do not permit cash advances unless you make a special arrangement, so no cash advance interest rate is quoted. Many cards have a cash advance rate that is slightly higher than the purchases interest rate, but sometimes the two rates are the same.

Interest rates are expressed as an annual percentage rate (APR) but are applied to your carried-over balance daily (by dividing the APR by 365), and the resulting interest charge is added to your account balance at the end of the monthly billing cycle. Purchase balance interest rates typically range between 10% p.a. and 21% p.a., but if you always repay your account balance in full when due you won't need to worry about the size of the interest rate on your card.

Credit score improvement

Once you have your first credit card, using it responsibly is one of the best ways there is to build up your credit history and improve your credit score. So always aim to pay on time (and in full if possible), stay within your credit limit, and try to avoid buying things you can't afford.

Alternatives to credit cards

Credit cards are far from being the only payment methods available to you. Here are some other ways to pay for your purchases, and how they compare with credit cards:

  • Cash. Cash is becoming less and less common as a form of payment. It is inconvenient and risky to carry around, can't be used for online payments, and since almost all employee earnings are now paid directly into a bank account, it has to be removed from an account before it can be used.
  • Personal loan. A personal loan has the advantage of charging interest at a much lower rate than a credit card, in the vast majority of cases. It will be a good choice for a single large purchase for a fixed amount (e.g. a car or major technology or appliance purchases). However, the disadvantages of a personal loan are that it may require security (i.e. collateral), the entire loan amount has to be drawn down at the beginning of the loan period, and it usually has to be repaid in equal instalments over a fixed term.
  • Debit card. A debit card is linked to your bank transaction or savings account. Rather than using the bank's money to make purchases and repaying the bank later, you pay with the card using your own money. The main advantage is that you avoid the temptation to overspend and get into debt, but the drawbacks include missing out on interest-free short-term credit and the free rewards and benefits associated with some credit cards.
  • Prepaid card. This works in a similar way to a credit card, in that you are using your own money. But instead of linking it to your bank account you preload it with a fixed amount of cash (e.g. $500) and top up the amount as required.
  • Buy Now Pay Later (BNPL). Australia's best known BNPL services are Afterpay and Zip, but there are many more. Users sign up for a particular service, then use their BNPL account to make purchases and delay payment. The purchase amounts usually have to be repaid within a few weeks, but instead of being charged interest the account holder may have to pay substantial account fees and/or late payment fees. It has the advantage of being interest-free (much like a responsibly-used credit card) but it can be more difficult to keep track of purchases, easier to overspend and get into debt, and more expensive in the long run if you incur account fees or late fees. If you want to read more on this, we have a whole article where we compare Afterpay to credit cards.

The credit card application process

Once you have chosen the card that suits you best, the quickest and easiest way to apply is to do it online. If you choose to do it via Finty you'll be directed to the bank's website and online application form. You'll be asked to provide details, and in some cases documentary proof, about your identity, age (you need to be at least 18), citizenship or residency status, residential address, employment, income, and any assets and debts or loans you may have. It's a good idea to assemble all this information before you begin. Also make sure you check the eligibility criteria for the credit card you’re interested in before you apply.

You'll also need to think about how big a credit limit you need to apply for. A low limit – perhaps $500 or $1,000 – is recommended, until you get used to the idea of handling credit. You can apply for an increased limit later if you need it, although there are pros and cons to raising your limit.

While some cards advertise 'Instant approval' or '60 second approval', such approval is only conditional on the verification of the information you have provided. In practice it can take anything from a few business days to a couple of weeks before you receive a final decision, and for first-timer applications the approval process may take longer than it would for someone with a full credit history.

Once your account is approved, the physical card will usually be dispatched within five days, sometimes less, although a few card providers take as long as 6-14 days to mail out the card.

Transferring a balance to your first credit card

If you're about to apply for your first credit card, you will not have an existing credit card balance to transfer to a new card. But you could have a balance to pay off on a personal loan or store card, so you need to know about the promotional balance transfer deals offered to may new credit card users. In order to win your business, many card issuers will allow you to transfer to your new card your existing personal loan, store card or credit card balance, and pay no interest charges (or very low interest charges) on the balance for a fixed period of time. For example, you could transfer a balance of $5,000 from an existing card, where you were paying 20% p.a. on your debt, to a new card where you would pay no interest at all on the transferred balance for 12 months. The only requirement would be for you to make minimum monthly repayments (of, for example 2% of the declining balance) and in some cases to pay an upfront transfer fee of between 1% and 2.5% of the transferred amount.

You can save heaps in interest charges this way, and also get some breathing space in which to get on top of your debt. You can compare credit cards with balance transfers here.

(Note that the only credit cards allowing transfers of personal loan balances are those issued by Citi: Citi's own cards, plus Qantas Money, Virgin Money, Coles, and a few smaller card providers.)

Learn about first timer credit cards

Worried about applying for your first credit card? Find out everything you need here before applying.

  • Pros & cons

  • Tips

  • FAQs

  • Guides

Convenient payment method

Cash is so last century. No one wants to carry around wads of the folding stuff. It's a security risk, it can't be used for online purchases, it can be dirty, and the coins you get in change are a nuisance. Paying with a card is much more convenient, especially with PIN-free Tap & Go transactions under $100 and the possibility of paying with your phone or other device. And it will come in particularly handy if you travel overseas, removing the need to purchase foreign currency in every country you pass through.

Track your expenses

Where does all your money go? It's hard to tell if you always use cash, but with a credit card you get a monthly statement listing all of your purchases and bill payments. Some card providers even provide an analysis by expense type, making it much easier for you to set and track your budget, a major advantage when it comes to taking control of your finances.

Take advantage of complimentary benefits

If you're in the market for a reward points or premium credit card, and can afford to pay the annual fee, you will usually extract far more value from your card in reward redemptions and complimentary benefits than you will pay in annual fees.

Improve your credit score

Think you'll need a personal loan or home loan in the future? It can be difficult to be approved for a loan if you have no proven history of responsible handling of credit. Getting a credit card and paying off your monthly balance promptly and consistently is one of the best ways of adding positive information to your credit file and improving your credit score.

Great for emergencies

It can be a good idea to keep a credit card in your wallet just for emergencies, like car repairs, medical bills, and quarterly utility bills that came out higher than expected. Emergency credit cards that rarely see the light of day should ideally have no annual fee.

Spending temptation

There's no doubt that it takes a fair amount of discipline to avoid the temptation to spend more than you can afford, just because paying with a credit card seems so easy. So before you bring your card out, ask yourself whether you'll be able to pay for the purchased item at the end of the month. If the answer is 'No', take more than a few moments to reconsider.

Can be expensive

There are plenty of ways in which a credit card can cost you more than it's worth. Paying a large annual fee for a card you hardly use is not a good idea. Choosing a reward points card and then not repaying your balance in full every month is also irrational, since the interest charges will be far greater than the redemption value of your points. And penalty fees and interest can mount up if you take cash advances, miss payments or exceed your credit limit.

Credit score damage

While handling a credit card responsibly – by never missing the minimum repayment and paying the balance in full as often as possible – will improve your credit score, there's no doubt that doing the reverse will damage your score. You can also lower your score by applying for several cards at the same time, or in rapid succession, since each card provider will make a hard enquiry on your credit history, leaving a mark in your credit file.

You don't need to apply for a card from your current bank

Although it's worth considering the credit cards offered by the bank where you have your transaction and savings accounts, you're not limited to their cards. You can choose a card that may suit you better from any provider, without needing to switch your everyday banking to them.

Don’t aim for the sky

It’s probably not a good idea to apply for a gold, platinum, or black level card if this is your first application, because of their stricter minimum income and credit score requirements. However, some banks have credit cards specifically for first timers. These cards tend to have a low credit limit and low annual fee, but relatively high interest rates. The interest rate needn't be a problem, however, since it's best to embark on your credit card journey with the intention of repaying your balance in full every month and therefore never having to pay interest charges.

Try to avoid temptation

With credit available, possibly for the first time, you will be faced with the temptation to overspend or take cash advances. These are both a bad idea. Spending beyond your budget means that you are unlikely to be able to repay the balance in full when it falls due, exposing you to prohibitive interest costs and the possibility of long-term debt. Cash advances are an even worse trap, since you don’t get any interest-free days on this kind of transaction, and usually pay an even higher interest rate calculated from the day on which you took the advance.

Aim to repay the full balance every month

Debt can quickly accumulate if you keep spending and only make the minimum repayment each month. Make sure you only spend what you can afford and try to pay off the balance in full every month, in order to avoid interest charges on your purchases balance.

Look for a low-interest card if you think you won't always repay in full

If your reason for getting your first credit card is to smooth out the bumps in your cash flow because your income is not consistent every month, you're going to find yourself running an interest-bearing balance on the card from time to time. So the overriding feature you should look for in a card is a low interest rate on purchases, to keep your interest costs as low as possible.

Avoid taking cash advances

Credit card cash advances are a potentially harmful convenience. It may seem easy to just take cash from your card at an ATM when you're running short, but be aware that not only will you pay a high fee each time (e.g. the greater of $5 or 3% of the withdrawal amount), you'll also be slugged with interest charges (often at a higher rate than you pay for carried-over purchase balances) from the date you take the advance until the date you repay it.

Read the fine print

When comparing cards, ensure you understand what the fees are and when they are charged. Fees can include annual fees, cash advance fees, late payment fees, international transaction fees, and a whole lot more.

Be aware of the interest rate charged by competing cards on both purchases balances carried from month to month and on cash advances (which attract interest charges starting on the day they are taken out – there are no interest free days on cash advances).

Check the number of interest-free days on offer for purchases, provided you always pay off your balance in full when it is due for payment. Credit cards typically offer either 55 or 44 interest-free days, and while the lower number of interest-free days shouldn't be a deal-breaker it's obviously better to have an extra 132 days of free credit each year.

Aren’t all credit cards suitable for first timers?

No. If you’ve never had a credit card before, there’s a strong possibility that your income is not particularly high and that your credit score is not yet very robust. These two factors should point you in the direction of a card with as many of the following features as possible:

  • A low annual fee, or zero fee, to be kind to your budget
  • Low starting credit limits available, since you probably won’t qualify for a high one, and a low one is easier to manage
  • A low interest rate on purchases, because if you’re just a learner in financial discipline, you may miss the payment due date occasionally

What kind of credit card is suitable for first timers?

It depends on your reason for not having a credit card before now.

The most common scenario is that of the young person embarking on paid employment for the first time. Their credit history is empty, so their score is low and they won’t qualify for a high limit. Nor do they want to pay a high annual fee for a card with rewards points or other benefits. The ideal card for them would be a basic card with no complimentary benefits and no annual fee, a low interest rate on purchases (just in case, although their aim should be to repay their purchase balance on time and in full every month) and preferably 55 days interest free. It might be necessary to compromise on one or more of these features.

If your income and credit score are both healthy, and you simply haven’t felt the need for a credit card until now, by all means choose any card which offers the best return in benefits (rewards points, insurance cover, &c) for your spending pattern. You can start on a moderate credit limit, and apply to increase it later if you find you need a bigger limit.

What is a 'no annual fee' card?

'No annual fee' credit cards are a great choice for people who want to reserve their card for emergencies; for those who spend regularly but always pay their monthly balance in full; or for cardholders who do not require the extra features associated with credit cards with annual fees.

There are different types of 'no annual fee' credit card, so make sure the one you apply for is best suited to your personal needs.

‘No annual fee for life’ cards have no annual fee for as long as the account is open. This may seem like the most attractive offer, but you should always check the terms and conditions to see if there are any other extra charges applied to the card.

Other cards feature 'no annual fee' for an introductory period such as the first year, but don't forget to check what the fee will be when the promotion expires.

When searching for a card with no annual fee, always compare how the lack of a fee is balanced with low interest rates on purchases, cash advances and balance transfers and other features, to find the best deal. It may work out cheaper for you to pay a small annual fee and lock in a low interest rate.

What card features should I check before choosing a first credit card?

It's easy to overlook some of a prospective card's features when you're a newcomer to credit cards. This checklist will help you remember what to look out for:

  • How much is the annual fee?
  • Is there an annual fee charged for a supplementary card on the account?
  • What are the interest rates charged on carried-over purchase balances and cash advances?
  • How many interest-free days are allowed on purchases if you have no carried-over balance – 55 or 44?
  • How much are the fees for cash advances, late payments, being over your credit limit, foreign transactions?
  • Can you earn reward points or frequent flyer points?
  • Are there any promotional offers (0% balance transfer, 0% on purchases, cashback, bonus points)?
  • Are there complimentary benefits attached to the card (free insurance, annual travel credits, free flights, free nights in hotels, free wine &c)?
  • What are the eligibility requirements (income, citizenship or residency status, credit history)?

What should students look for in a new card?

Studying at university can be one of the most exciting times of your life, but also one of the most financially challenging as you learn to manage your own money, often on a tight budget. A student credit card can be a useful tool in managing your finances and covering the expenses of studying such as books, field trips and the everyday costs of accommodation and food. Many Australian credit card providers offer cards aimed at students. Finding the best one for you is a case of comparing the cards’ key features.

Student credit cards should feature low interest rates and a low (or preferably no) annual fee. The eligibility requirements should have low criteria for minimum income since students are unlikely to be earning big salaries during their studies and typically haven’t had time to build up a credit history.

Can I link my credit card to my Afterpay or Zip account?

You certainly can. In fact, many BNPL service providers require you to link a credit card or debit card to your account so that automated repayments can be made. There are both advantages and disadvantages to linking your credit card to your BNPL account:

Pros

  • Further extension of interest-free credit
  • Access reward or frequent flyer points for BNPL purchases
  • Avoid late payment fees with automated payments

Cons

  • Debt is only postponed, not cleared
  • Increased temptation to spend
  • Greater risk of long-term debt
  • Could max out your credit limit

If you're thinking of getting a credit card so that you can link it to a BNPL service, it will be worth your while to read our guide: Is funding a Buy Now Pay Later account with a credit card a good idea?

Can I decide what my credit limit should be?

To some extent, yes. Cards tend to have a minimum and maximum available credit limit (e.g. minimum $1,000, maximum $50,000) so the credit limit you are offered will be within these guidelines. You may be asked to nominate a credit limit on your credit card application, but when the bank assesses your application they will work out what they think your credit limit should be, based on your income and credit score. If you think that the credit limit you are offered is too high (too much of a temptation, or unnecessarily locking up credit you'd like to use elsewhere) you can ask for it to be reduced. It's a good idea to start with a low limit if you're a credit card first-timer.

You can also apply for a credit limit increase down the track, if you wish, but the card provider is not allowed to contact you to propose an increase in your credit limit.

How can I improve my chances of getting approved?

Your first step should be to check your credit score. Having a good credit score will improve your application's chances of approval. Check out our guide on how to improve your credit score.

Then compare credit cards and choose one that will suit your income and your needs. For example, there's no point in applying for an expensive, premium card if you have only a low income. Apply for only one card, because making multiple applications at once, or in quick succession, can damage your credit score and make it harder to get approved.

Check your chosen card's eligibility requirements to make sure you can comply with them. Assemble all the information you'll need for completing the online form, such as proof of identity and address, proof of citizenship or residency status, employment details and recent payslips.

If you have a reasonable credit score and qualifying income you should get a speedy conditional approval. But be prepared for follow-up calls or messages from the bank in case there are any details they need to clarify.

Can casual workers apply for a credit card?

Yes. It doesn't matter what your employment status is provided you can meet the card's minimum income and other eligibility requirements.

Can I apply for a credit card if I'm self-employed or a freelancer?

Yes you can, but the application process will not be quite as straightforward as it is for wage and salary earners. You won't have payslips to prove your income, so you'll need to provide some or all of the following information:

  • Copies of ATO tax assessments (or possibly the full tax return) for the last two years
  • Copies of payment notifications from customers, or invoices issued to customers
  • Contact details for your accountant, if you have one