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Smart Money

7 Must-Know Tips For Your First Credit Card

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Pauline Hatch      

Applying for your first credit card is pretty cool. I mean, isn’t it free money? Our parents casually handed over plastic cards to pay for everything without a second thought. Well, plastic money is still real money, and there’s only one person holding the bill – you. Here’s what you need to know as a first-time credit card owner.

We aren’t taught enough about credit cards (or money in general) when we’re at school. It can feel like credit card money comes from a bottomless well of funds unless someone explains how credit works. Flying blind in the world of money can cause costly mistakes, some of them serious (and not something mum and dad can easily fix).

Before you apply for any kind of credit (which is when you borrow money of any kind, like a home loan, personal loan, or a line of credit with a credit card), you should educate yourself. We’ve made it easy with these top 7 must-know tips for first timers.

Tip #1. Being given credit is not an invitation to start spending

When you apply for a credit card, your card provider will assign you a credit limit. This limit will be based on a number of factors, including your credit history, your employment status and your income. For most first-time credit cardholders with limited credit history, their credit limit will typically be quite low, ranging from $500 to $1,000.

Regardless of how high or low that limit is, it’s important to remember that just because it’s there, doesn’t mean you have to spend it. When we first get a credit card, that notion of having ‘free money’ often encourages us to spend, giving us permission to spend even if we know we can’t pay it all back. However, this can lead to some serious problems if spending keeps stacking up.

How Does A Credit Card Work?

When you make a purchase on your credit card, that purchase is added to your balance. Most cards offer a grace period, in which purchases do not start accumulating interest until a week or so after the statement period ends and the monthly payment is due.

As long as you pay off the entire balance by the due date, you can avoid paying interest on your purchases. However, if you only pay off part of your balance, your purchases will start accruing interest at the card’s purchase rate. Not only that, any new purchases you make will also start accruing interest from the day you make them.

So, if you start spending on your new credit card, making purchases here and there without being able to pay them all off at the end of the month, they will start stacking up and attracting interest. This can make it hard to clear your balance, as you have to pay off what you owe, plus interest. And, if you chose a card with a high purchase rate, that battle becomes even harder.

Instead of thinking of your credit limit as ‘free money’, consider each purchase before you make it. Unless you know you can pay off those purchases at the end of the month, don’t make them. So, put that that MAC lipstick back on the shelf and remove that PS4 game from your cart. If you don’t have the money to cover it, your credit card should stay firmly in your wallet.

If you’re having trouble with overspending, a spend tracker app could help. Using this in conjunction with your banking app, you’ll be able to track your spending while keeping tabs on how much you have available to spend. You could also create a budget so you know exactly how much you can afford to spend on extras, letting you splurge when you can afford it.

Tip #2. Different cards suit different cardholders

Some credit cards are more exciting than others. While some simply offer access to credit, others offer the opportunity to earn rewards while accessing enticing features such as airport lounge passes, VIP event invitations and hotel stays. You want the more exciting option, right? Unfortunately, while they may seem appealing, these higher end cards don’t typically suit first-time cardholders.

One thing many first-time cardholders are drawn to is rewards. In an ideal world, rewards cards would work for everyone. They would let you earn heaps of incredible rewards simply for spending on your card. In the real world, however, rewards don’t come for free – and they don’t usually suit smaller spenders.

With a rewards card, you will pay an annual fee. If this annual fee is $90, you would have to earn rewards worth more than $90 each year just to make it worth your while. If your card provides rewards equal to 1% of your spending, your annual spend would need to be $9,000 just to break even. And, if you ever carry a balance on your card and pay interest, you would have to work even harder to see any value from your rewards.

Rewards cards tend to work best for cardholders who channel a large spend through their card, and then pay it all off at the end of each month. As a first-time cardholder, it might take some time before you are able to do that, so in the meantime, it would be best to stick to a simple, no frills card that helps you keep costs down.

Credit Cards For First-time Cardholders

Low Interest Credit Cards: With a low purchase rate, these cards can make it easier if you overspend and need some time to pay off your balance.

No Annual Fee Credit Cards: With no annual fee, this type of card can sit in your wallet until you’re ready to use it. You don’t have to pay to keep it there, and it can help you get the hang of credit while keeping features simple. Take note of the purchase rate on these cards, however, as they it may be higher than you’d expect.

Low Income Credit Cards: These cards have a lower minimum income requirement, making it easier for first-time applicants with a lower income to apply. With a lower income requirement comes a lower credit limit. These cards also usually have a low rate or low fee.

Student Credit Cards: Geared specifically towards students, these cards can be easier for students to get approved for, even with a lower income and minimal credit history. Be aware of higher purchase rates, even if annual fees are low.

Credit Cards For More Experienced Cardholders

Rewards Cards: Before applying, weigh up what you would pay in annual fees against what you would earn in rewards. As rewards cards reward spending, these cards may not suit first-time cardholders who are not yet used to regulating their spending, and who may have trouble paying off their entire balance each month.

Platinum Cards: With a higher minimum income and a requirement for good credit history, these cards don’t usually suit first-time cardholders. They also tend to have a high annual fee and high purchase rate, making them more expensive, especially if you overspend and carry a balance.

Cards with Introductory Offers: While you may be able to take advantage of a good intro offer as a first-time cardholder, it’s important not to get sucked into applying for a card simply because it has an appealing offer. Look beyond the offer to see how well the card will suit you in the long term, reading the small print to see how much it will cost you to keep it in your wallet.

Tip #3. You can use your credit card to build your credit

According to a survey (1) released last year by consumer education website CreditSmart, many young Australians are unsure about credit reporting and how it affects them. The survey showed that 44% of millennials are unsure of the difference between a credit score and a credit report, and more than half are unaware of what a lender looks for in a credit report.

While it may not affect them too much in the short term, this lack of understanding could cause problems later on down the line. Someone who doesn’t understand credit reporting may make no effort to build their credit over time, or worse, may make mistakes that cause them to have bad credit, making it difficult to get approved for a car loan or mortgage when they’re older.

Credit Reporting: How Does It Work?

Whether you like it or not, you have a credit file. Allowing potential lenders to access important information about what credit you currently have or have had in your name in the past, this credit file tells lenders how well you have dealt with that credit and how much of a risk you are likely to be if they provide you with more credit.

Based on an analysis of your credit file, you will receive a credit score. According to ASIC’s Money Smart website, this credit score will be based on things like:

  • the type of credit products you’ve held in the past two years,
  • your usual repayment amount,
  • how often you make your repayments and if you make them by the due date,
  • your personal details (such as age and where you live),
  • the type of credit providers you have used (for example, whether it’s a bank or utility company)
  • the amount of credit you have borrowed,
  • the number of credit applications and enquiries you have made,
  • any unpaid or overdue loans or credit you have,
  • any debt agreements or personal insolvency agreements relating to bankruptcy in your name.

Depending on the credit reporting agency, the credit score you receive will range between zero and 1,200 or zero and 1,000. A good score would suggest to a potential lender that you are a responsible borrower with a proven track record of dealing with credit correctly. So, a higher score should make it easier for you to get approved for any new credit you choose to apply for.

However, a low score would generally suggest that you have been irresponsible with credit in the past, perhaps maxing out your credit cards or failing to make repayments on time. With a low credit score, you may find it more difficult to get approved for credit applications such as a personal loan or credit card, a car loan or a mortgage. If you are approved, you may have to pay higher rates of interest, making the loan more expensive overall.

What about having no credit history? When you have no credit history, that means you have had minimal credit in your name. As potential credit providers are unable to see how you have dealt with credit in the past, they have no idea how you may deal with it in the future. This can make it difficult to get approved, which could become a problem when you look to get a mortgage or other types of credit in the future.

Applying for a credit card – and using it responsibly – can help you to build your credit score. If you have a credit card, your credit score will be positively affected if each month you make repayments on time. According to Experian, one of Australia’s three main credit reporting bureaus, payment history is one of the top factors in most credit scoring models and accounts for 35% of a credit score (2).

Other ways to improve your credit include limiting your credit applications (as numerous credit applications can be an indicator of financial stress), and reducing your credit card limits. Why? If you have a number of credit cards with high limits, it increases your potential for risk. With all that spare credit, lenders see that you could spend up to those limits and get into trouble financially.

In terms of managing your credit score, you should regularly review your credit history to make sure everything in your credit file is accurate and up to date. You can apply to have errors corrected with the appropriate credit reporting agency. Managing your debt wisely can also help you maintain your credit, preventing you from getting over your head and missing repayments.

How bad is bad credit? A default will stay on your credit report for five years, while a late payment will stay on your credit report for two years. The more late payments on your credit report, the more your credit score will drop. Even declined credit applications take their toll. This is especially important to remember for first-time cardholders.

When you turn 18, you will likely start receiving invitations to apply for all sorts of credit cards by your bank, and in some cases, other lenders. These invitations may make it seem like you are already approved, and all you need to do is fill in a few details to apply. However, you still need to meet the eligibility requirements of the application. If you don’t, your application will likely be declined, and this will be recorded on your credit file.

The good news is that negative items on your credit file fall away over time. If you make mistakes, you can work on balancing them out with responsible behaviour. Making your credit card repayments on time, paying off your balance in full and being smart with your spending should help you build up your credit over time, making it easier to get approved for big ticket credit applications, such as a mortgage in the future.

Tip #4. Cash advances are not the same as debit card withdrawals

While it may look similar, withdrawing money on a credit card is not the same as accessing money from your current account using your debit card. As the name suggests, a ‘cash advance’ provides you an advance in cash. Just as a purchase on your credit card advances you credit, cash withdrawn on your card provides access to money that is not actually yours. It’s your lender’s.

Your lender will allow you to ‘borrow’ money using your credit card using the cash advance feature, but it comes at a cost.

  • You will usually pay a higher rate of interest on cash advances, up to 25% p.a. depending on the card.
  • You will usually pay a fee for each cash advance.
  • When you take out a cash advance, there are typically no interest free days on that transaction, which means that high rate of interest starts to accrue from day 1.

It’s best to avoid cash advances whenever possible. Just pretend the feature doesn’t exist.

Tip #5. You can avoid fees and costs by making smart decisions

Aside from receiving invitations to apply for credit cards through the post, you may find temptation to apply elsewhere as well. Credit card providers may set up shop at college and university orientation weeks, offering sign-up bonuses such as t-shirts, pens and hats to unsuspecting students starting their journey into tertiary education.

If you have looked at credit cards online, you may soon find your social media feed clogged with credit card ads, most likely unsuited to your needs. These ads show feature-packed cards with enticing introductory offers, which usually have high annual fees and interest. But, what you may not know as a first-time cardholder is that credit cards don’t have to be expensive.

By choosing the right card, and dealing with it responsibly, you could access credit for free.

Interest: You can avoid interest by shunning cash advances, and by only spending what you can afford to pay back at the end of each month. Choosing a card with up to 44 days or 55 days interest free, you can avoid interest accruing by always clearing your balance by the due date.

Annual Fees: By choosing a card with no annual fee, you can avoid that yearly outgoing to save money. These cards are typically no frills, but this can make it easier for you to manage as you get used to dealing with credit.

Other Fees: If you check the small print, there will be plenty of potential for fees. However, by being smart, you can avoid most of these fees altogether. By making your repayment on time each month, you can avoid the late payment fee. By not going over your credit limit, you can avoid the over-limit fee. By shunning cash advances, you can avoid the cash advance fee. And so on.

Tip #6. Don’t just make the minimum payment

On your credit card statement, it will tell you what your minimum payment is. This is the minimum payment you must make to avoid getting a late payment fee or a default on your account. Varying according to the card provider, the minimum payment will either be a fixed amount, such as $20, or a percentage of the balance, which is usually 2-3%.

Changes to the way statements are provided now mean that card providers need to tell you how much it would cost in interest and how long it would take to pay off your current balance if you were only to make the minimum payment. By taking time to check that out, you will see why it’s not a good idea to only pay the minimum.

Sometimes, paying only the minimum can cost hundreds or even thousands of dollars in interest, leaving the cardholder in debt for years, or even decades. While we know it’s not always possible to pay off your balance in full, try to pay as much as you can, and then pay it all off the following month.

To make it easier to remember, you could set up auto-pay so you never have to worry about missing a payment. This could be arranged for the day after your payday, so you know the money will be ready in your account.

Tip #7. A balance transfer offer is not a ‘clean slate’

Balance transfer offers are common in the credit card world, but they should not be thought of as a ‘get out of jail free card’ that allows you to be irresponsible with your spending. Used correctly, a balance transfer offer can be used as a tool to pay down debt. But, that doesn’t mean you should overspend on your current card because you think you can clean up the mess with a balance transfer afterwards.

Here’s how a balance transfer works:

  • You find a balance transfer offer that works for you. A 0% balance transfer offer is usually best, offered over a period of time that allows you to pay off your debt.
  • Making sure you are eligible for the card, you complete the application, providing details of the balance to be transferred.
  • After approval, your new card provider will arrange the transfer, but it’s up to you to close the old card account. Closing this account removes the temptation to spend more on the old card.
  • Over the introductory period on the new card, you pay off your transferred balance, with the best result being your debt is completely paid off before the intro period ends.

However, dealing with a balance transfer doesn’t always run as smoothly as that. Here are some problems that can occur:

  • Your card charges a balance transfer fee, which you will have to pay off alongside your transferred balance.
  • Your card only allows a balance transfer up to a certain percentage of your approved credit limit. This leaves you with debt to pay off on both the old card and the new card, making it more difficult to manage.
  • You don’t close the old account and continue to spend on it, racking up more debt that you can’t pay off.
  • You spend on the new card, making it difficult to pay off the new spending and the transferred balance. On top of that, interest free days do not apply to new spending when there is a balance transfer on the card, so interest starts accruing from the date of the transaction.
  • You fail to pay off the transferred balance before the intro period ends. The remaining balance reverts to the card’s purchase rate or, worse, the cash advance rate, making it harder to pay off as interest accrues.

As you can see, balance transfer offers are not an easy solution. While they can certainly help you to pay off your credit card debt with hard work and good budgeting, they are not something you should rely on as an excuse to overspend.

Getting Smart With Your Card

Having a great relationship with credit means being smart with your credit cards, and understanding how they work. At, we want everyone to find the best card for their needs, to then use them wisely. Whether you’re applying for your first credit card, or you’ve had a number of credit cards in your name, you can hone your knowledge at our sister site, Credit Card EDU.

With seven courses to choose from, this 100% free online course provides essential information about how credit cards work, and how you can make them work for you. Using this info – plus the tips above – you can then check out the range of cards available here on to find the one that will best suit your needs. Don’t forget to browse the other articles here as well for even more info!



Pauline Hatch

Pauline is a personal finance expert at, 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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11 comments (showing the latest 10 Q&As)



12 April 2022
Hi Pauline & Co Hoping you can advise or assist. I have credit issues over the years and have since had everything cleared up. My issue now is trying to find a way to build my credit, I have no defaults etc on my file and currently do not have any credit cards or loans etc. I Do not use any after pay type services, I recently contacted my electricity company asking to they provide credit reporting due to bills being over $150 but yeas they don’t report any good bill paying customers so that was a myth🤦‍♂️ I’m basically back to being 18 again so to speak with no credit history at all and just trying to understand the best approach to take. I have a work phone so need for a phone, own my car outright so need for a car loan. My next option was a credit card but don’t want to take the chance of applying and getting knocked back only for that to once again start to decrease my credit score. I’m longed for the goal of owning my own home but feel I still cannot get there. Understand if you can not assist but would to hear an opinion or some advice as it would be greatly appreciated. Many thanks Matt
    Pauline -


    13 April 2022
    Hi Matt, thanks for your message and glad to hear you’re on the right track to rebuild your credit score. It sounds like you already have, but ordering a copy of your credit report and score should be foremost. You can sign up to receive alerts if anything changes. We’ve written a pretty detailed guide on building your credit report and score, so hopefully that can help you too. Let us know how you go and we’d love to hear an update when your score goes up.
Kevin Edmunds

Kevin Edmunds

21 October 2021
G`day Roland are you able to point out any credit cards that can be applied for when our income is disability pension for my wife and carers pension for myself
    Roland B Bleyer - Founder


    22 October 2021
    Hi Kevin, g’day to you too! Although we cannot recommend one card over the other, we have written a guide to credit cards for pensioners that might help you out. We also have created a list of pensioner credit cards that you can also check for your options. Make sure to check each card’s eligibility as well as the TMD before applying. Hope this helps!


7 September 2021
First time credit-card user here and i'm after Qantas points. I'm good at controlling my money; monthly spend is anywhere between $2k-$2.5k. What seems more worth (e.g. rewards vs. annual fee + points per money spent) in my situation? 1) NAB Qantas Rewards Signature; 2) Commbank Ultimate Awards; 3) Qantas American Express Premium; or 4) Qantas American Express Discovery Card.
    Roland B Bleyer - Founder


    8 September 2021
    Hi Lily, how exciting that you’re beginning your comparison of credit cards. Whilst we can’t recommend one card over the other there are some pretty huge bonus points on offer right now. At the time of writing the Qantas American Express Ultimate Credit Card has up to 120,000 bonus points but a hefty annual fee, that can be offset with the Qantas travel credit of $450 and the increased points earned per dollar spent. The NAB Qantas Rewards Signature Credit Card has a slightly lower annual fee, lower earn rate and points capping, but is pretty much accepted anywhere, whereas the Amex card sometimes isn’t. We’ve created a tool that you can use to compare Qantas Frequent Flyer credit cards. All you have to do is pop in your estimated monthly spend to get a rough guide to how many points you can earn. You can then click “Save Card” to add it to your shortlist or click more info to read our detailed review. Hope this has helped, and best of luck in your points hunting journey.


13 August 2021
I need this card
    Roland B Bleyer - Founder


    13 August 2021
    Hi Adelana, thanks for writing. It’s important to ensure that you meet the eligibility criteria before you apply for a credit card. Please keep in mind though that different cards have different offers and some have higher income requirements than others. You can check for your options on the list of credit cards we created, then click into each card review to learn more about it and check the requirements.


27 February 2021
Looking for a bad credit Credit card
    Roland B Bleyer - Founder


    1 March 2021
    Hi Aaron, depending on how poor your credit score is, it is unlikely that you'll be approved for a new credit card. And submitting multiple applications in a short period of time is likely to damage your credit score further. To increase your credit score, start by reducing any unused limits you have and work to make your existing repayments on time. After 6 months or so, check your credit report again and see if your score is strong enough to apply. After that, look at cards with minimal extras and a low credit limit. I hope that helps.
<a href=Tips for Using Credit Cards to Make Money - Florida Independent" />

Tips for Using Credit Cards to Make Money - Florida Independent

3 September 2019
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