7 important questions to ask yourself before taking out a credit card

Published on June 15th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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Questions to ask before taking out a credit card

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Aussies love their plastic, but we sure like getting a good deal on our credit card. Whether you already own one or plan on owning one, these are the 7 important questions to ask yourself before taking out a credit card.

Do you really need a credit card?

Look at your desired credit card, now back at your budget, and back again at your credit card. Do you really need it? Does it come with flexible features and fees that work around your budget or would you find yourself overextending yourself just to meet your monthly payments? You can also assess if the card will work for what you are planning on using it on to see if it will be suitable for you.

Have you checked your credit score?

You may want to check your credit score and your credit history before going to a lender to apply for a credit card. This is likely the first-place credit card issuers are going to stop to check your creditworthiness. However, only 1 in 10 Aussies check their credit report before approaching a lender. You can get a free copy of your credit report each year from places like Equifax.

Do I know which card will be suitable for me?

It can be handy to talk to a credit card issuer in terms of what card can be suited for you. Not only do they have an ear to the ground when it comes to the latest in the credit card market. Whether you are a no-frills type of person or a reward points chaser, they will be able to find a card that will be able to give you the most value for your money.

Can you pay your bills?

As much as a credit card offers you the convenience of swiping for expenses that need to be taken care of, it is important to check the fees and charges. These include the interest rate, foreign transaction fees, late payment fees, and the annual fee. Keep in mind to always compare your options to find an option that is best suited for your wallet.

Is the reward program worth its salt?

If you are interested in reward programs, it is important to choose a credit card that comes with a competitive rewards program. Aussies are big fans of loyalty cards with 71% of Australians admitting being part of one. Furthermore, 50% of Aussies are part of a frequent flyer program.

Have you checked the effect having your card will have?

Do you already own more than one card? Have you closed your other existing cards before taking on your new one? Such things can have a negative effective effect on your credit score and your report. Remember that every time you apply for a card an issuer will make an inquiry on your credit report which can affect your score negatively.

Are you still owing on your current card?

If you have a credit card that you still have to pay off, you will be better off not taking out a new one. Rather focus on paying off your current card to start off on a clean slate. It can also reflect positively on your credit report.

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

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