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Smart Money

Shopping Online With Your Credit Card

Last updated

Pauline Hatch      

The online marketplace is booming with potential bargains on all kinds of things. While there is usually a few different ways to pay for online purchases, credit cards are still favoured by most people.

After all, paying with plastic can give you a range of benefits including complimentary extras and chargebacks if something goes wrong during the shopping process. But, on the other hand, credit cards can lead to extra costs and hassles in the form of security issues and surcharges.

According to Fair Trading, Australians spend more than $11 billion annually shopping online, but “a high proportion of consumers are not aware of their basic online shopping rights”. This means that you could be getting ripped off or exposed to more risks than you realise every time you pay with plastic on your computer or mobile device.

While maximising the benefits and controlling the issues associated with shopping online with a credit card can seem like a balancing act, it is something that gets easier with a bit of guidance. So here we explore five of the most important things to keep in mind when you shop online and how to make it work for whatever credit card you use.

On This Page

  1. Finding the best online shopping deals
  2. Website security and your credit card
  3. Avoiding credit card fees
  4. The best credit card features for online shopping
  5. Tips to help manage the card you use for online shopping
  6. Conclusion

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Tips to find the best online shopping deals

A search for online shopping deals will bring up pages and pages of results for both deal listings and online stores. While it’s great to have so much variety, it also takes a lot of time to go through them all.

So what does it take to find the best online shopping deals for exactly what you want? Organisation and focus are key elements of the process.

In fact, a popular Lifehacker article from a few years ago suggests that keeping a list is one of the easiest ways to find the right deals when you shop online. But unlike regular shopping lists, you can create wish lists with whatever online stores you like to shop at – and often these stores will let you know when what you want is on sale.

Not only will organisational tools like wish lists help you find the best online shopping deals, but it will also help you stick to what you want to buy and could save you more money as a result. Other ways to find the best online shopping deals include:

  • Comparing prices between a few websites,
  • Considering the total cost with shipping,
  • Subscribing to online store newsletters,
  • Sending an enquiry to see if a store will price match
  • Becoming a member of loyalty programs; and
  • Buying everything you need during sales season.

There are also a growing number of online-only sales that can make it easier to get the best price on anything you want. While some online stores have their own exclusive sales, independent promotions like Click Frenzy are also a great opportunity to buy a lot of things that you need at the best possible price.

It’s also important to consider the terms and conditions of any store you shop at online. The return policy, shipping and other additional charges, and the privacy policy are all particularly important when you shop online so that you avoid any nasty surprises at the virtual checkout or further down the track.

The bottom line is that online shopping has a lot of great deals but there are still times when you could pay more than you want. But staying organised and following the guidelines above will help you get the best deals as often as possible.

Website security and your credit card

As cybercrime continues to expand, keeping your credit card safe online is becoming more and more important. One of the biggest risks in terms of online shopping is the security of the website and payment process.

“When you shop online, make sure you are smart about the whole purchasing process – know who you are dealing with, know what you are buying, be confident you will get what you have paid for, and ensure that your account and credit card details are being dealt with safely,” the Stay Smart Online website says.

It recommends checking the contact details, making sure the payment page is secure with a valid digital certificate and locked padlock in the browser, and printing and keeping proof of the transaction to help keep your details safe when you shop online.

The federal government and many experts around the world have also warned shoppers about the increasing number of fake shopping websites that look authentic. Most of these sites do not list contact details (or have fake ones), and may offer deals that look too good to be true, emphasising the importance of contacting any new stores you want to shop at online. But if you can, it’s a good idea to shop at stores you already know and trust, such as Australian retailers, stores with a physical presence or those with a lot of mainstream publicity.

Another option is to sign up for a free service like Verified by Visa, MasterCard SecureCode or CommBank’s NetCode. These programs help authorise credit card payments, adding a layer of security to the purchase process online. They do, however, only work with participating merchants, with just standard protection available at other online stores (particularly international ones).

If you decide to shop at international stores online, make sure you let your credit card issuer know. With most credit cards offering 24/7 fraud monitoring services, an international transaction could easily be mistaken as a red flag, so letting them know will mean they can do a better job of figuring out valid transactions and protecting you against unauthorised credit card charges.

Avoiding credit card fees

There is a wide range of fees that can be added onto online purchases, particularly when you pay by card. Surcharges are by far the most common, being added onto everything from airfares to movie tickets. According to research from Choice, some of these fees are as much as 17% of the initial price.

But there are several ways to avoid credit card surcharges when you shop online, starting with checking whether or not fees are applied when you pay by card. Most online merchants have a “fees” or “how to pay” page that outlines surcharges but if you can’t find that, it might be in the terms and conditions.

When a credit card surcharge does apply, merchants legally have to offer an alternative payment that does not attract this cost. Services like POLiPay, PayPal and BPay are some of the services that could be used to avoid credit card surcharges, but it does depend on the merchant you’re shopping with.

If PayPal is an option, however, you will be able to still use your credit card if you link it to your PayPal account. That means you could get all the benefits of credit (and any rewards) without a surcharge.

An “international transaction fee” is the other big credit card charge to watch out for when shopping online. Credit card issuers apply this fee to purchases made with international merchants to offset the costs associated with transferring money to another currency.

With some international transaction fees around 3% of the purchase price, it can add a lot of money to your credit card balance, so it’s important to be aware of whether or not your issuer applies this fee. But the good news is that there are credit cards without international transaction fees, such as the ANZ Rewards Travel Adventures Card, the Latitude 28° Global Platinum Mastercard and all platinum Bankwest credit cards.

You may not be able to avoid credit card fees every time you shop online, but being aware of the most common ones, and alternative options, can help you make smarter shopping decisions.

The best credit card features for online shopping

As more and more people shop online, credit card issuers are developing cards with the right mix of features to help you get the most out of the digital marketplace. In addition to credit cards with no international transaction fees, there’s a range of other features that can make shopping online with your credit card even more worthwhile.

In fact, many credit cards have online shopping benefits you may not even know about. All credit cards, for example, give you the opportunity to request a chargeback if you are misled or overcharged, as well as if you have not approved a transaction. Similarly, sophisticated fraud protection and zero liability policies are standard for Australian credit cards and help keep your accounts safe when you shop online.

There are also complimentary credit card extras that may or may not come with your particular credit card (but are worth looking out for if you shop online a lot). Some of the best extras for online shopping include:

  • Purchase protection insurance,
  • Best price guarantees; and
  • Extended warranties.

Credit card rewards are also great for saving money when you shop online. With most reward programs also including an online store for redemptions, you could find what you are looking for and claim it using points, or with a combination of points-plus-pay.

But while points may save you money on the actual products you buy, the other features above can be just as valuable at different times. So reading up on the features of your credit card, and choosing a card with the best features will help you get the most out of shopping online.

Tips to help manage the card you use for online shopping

Getting a credit card is one thing but managing it is something else entirely, particularly when online shopping makes it so easy to spend money.

Some of the strategies outlined can help in that regard. Writing a list of what you want to buy (and sticking to it), for instance, makes it easier to stick to a budget. Similarly, being aware of credit card fees can help keep your balance in check.

But one of the most important tools for managing your credit card is actually also on the web: internet banking. By logging into your credit card account, you can check your balance and view transactions. That means you can make sure you stay on track with your financial goals and check for any unauthorised or unfamiliar charges that could be the result of credit card fraud.

Managing your finances, however, is a personal thing. While some people may like spreadsheets and budgets, others might prefer to spend what they want and deal with the balance later. Whatever your current habits are, the following tips could help make it easier to keep your credit card in check when you shop online:

  • Keeping a record of all your purchases,
  • Factoring in additional charges such as shipping costs or credit card fees,
  • Sticking to just one credit card for all your online shopping,
  • Factoring in authorisation holds so that you do not go over your credit limit,
  • Checking the total charged after international transactions (for fees and exchange rates),
  • Considering other payment options like PayPal to save on credit card fees; and
  • Putting money aside to help pay off the card balance when your statement comes, or transferring it straight away.

Credit cards are one of the most convenient ways to pay for things online, and also the most popular payment method. By being aware of different factors that can affect your credit card when you shop online, you can avoid huge interest charges and reduce fraud risks so that you really do get the most out of shopping online.

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Conclusion

Online shopping and credit cards go hand in hand, so it is a good idea to consider the different ways one affects the other.

As MoneySmart has noted, “Whether we are doing the weekly food shop, booking holidays or buying that special gift, more and more of us are turning to the internet to buy goods.”

Paying with a credit card, the organisation says, can give you extra protection, “including the right to a ‘charge back’ if you fall victim to fraud”. But the benefits you get from shopping online with a credit card still vary from issuer to issuer, so reading about all of the different features available means you will be able to choose the best credit card to use when you shop online.

Keeping up-to-date on internet fraud and online shopping risks, on the other hand, will help keep your credit card details and personal information safe. So whether you shop online all of the time or only rarely click to buy, being aware of the elements outlined above means that you can make more informed decisions to stay safe and reap the rewards of shopping online.

Pauline

Pauline Hatch

Pauline is a personal finance expert at CreditCard.com.au, with 8 years in money, budgeting and property reporting under her belt. Pauline is passionate about seeing Aussies win by making their money – and their credit cards – work smarter, harder and bigger.

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