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Rewards Credit Cards

Rewards Credit Cards: the ups and downs

When you think about rewards credit cards it is hard not to feel good.  I mean its right there, written down, and we want to believe it – there are perks that come along with using this particular credit card.  The truth is that most, if not all, credit card companies offer its members some type of reward.   Whether that reward come in the form of frequent flier miles or points collected toward some major purchase, it’s nice to get an extra bonus in the form of a reward with your credit card.

The real question is ‘are the benefits of rewards credit cards worth more than other types of credit cards?’  To be fair, there are plenty of other special offers that come with a particular credit card. They negate the need for a reward card that, say, allows you to rake up travel miles toward the purchase of a pair of airline tickets to your favorite destination.  Let’s face it, if you can get a card with a super low interest rate and no annual fee, you might save enough money in one year alone to buy tickets and hotel rooms to your favorite destination.

The reality is that rewards cards are often a great option for people who like to pay with credit cards.  But the reality is also that many of the companies offering rewards credit cards are using them as a marketing tool to draw more customers.  An astute and savvy person who is fiscally responsible will read the fine print in order to make an informed decision regarding what specific type of credit card will fit them best.  Anyone who doesn’t do this can find themselves signing up for a ‘so called’ rewards credit card with an unbelievably high APR.

Many companies offer rewards credit cards to its customers; but they offer other cards as well.  You’ll want to check all of the cards offered by a company, as well as compare different companies to each other.  Don’t just assume because a card is called a ‘rewards’ card that it is automatically better than another.   And in addition to studying what credit card options are out there, know what your own preferences are.  Different credit cards fit different people; your job will be to find which one fits you best.

Are you going to make enough purchases to collect the points or miles to get that prize the credit card company is undoubtedly dangling before you?  Will you save more simply by having a low interest rate or a waived annual fee?  The point is that just like you purchase clothes that fit your particular body, so should you get the credit card that fits your particular financial life.  In this case, that means picking the credit that offers you the most and charges you the least.  If that happens to be rewards credit cards for most of you, great.  If you choose another type of credit card, that would be great too!

What are Virtual Debit Cards?

Online shoppers are often faced with the risk of having their credit or debit card details stolen. This has been a major setback, for many would be shoppers. However, an ingenious solution has been developed, whereby, a shopper is no longer required to divulge any of their credit or debit card details, every time they shop online. Instead, they can apply for a virtual debit card, which they can use to do their shopping safely.

A virtual debit card is a 16-digit number, similar to that of a normal credit, with an accompanying expiry date and CVV2 or verification number. It functions just like any other Australian debit card, with the exception that there is no physical card involved.

Application and How It Works

Once someone applies for a virtual debit card, he/she will be sent an email containing all the card information, i.e. 16-digit debit card number, CVV2 number, and the expiry date; as opposed to a normal debit card, which is physically mailed, after a successful application. One can then load the virtual card, with funds from other credit cards, or a bank account. When this is done, the virtual card is ready to be used, just like any other credit or debit card, for making secure online purchases.

Benefits

Apart from the security that they offer to online shoppers, virtual debit cards are very beneficial. First, the cards are easily accessible, since one is not required to undergo credit checks, or have a verifiable source of income. This makes the virtual debit cards accessible to students, and people in the self-employed category, who are normally denied credit cards, due to lack of credit, poor credit ratings, or unstable earnings. In addition, since the virtual card is a debit card, one does not have to worry about issues associated with credit cards, such as overspending. The amount of money available for spending is the amount that one loads to their account. As a result, charges such as late payment fees, over limit fees, and non-sufficient funds fees are non-existent. Finally, since there is no physical card involved, one is not worried about losing their card or having it stolen

Paypal Debit Card

Paypal, largely recognized as the most popular way, aside from credit cards, for internet users to make online purchases offers multiple different ways to send and receive money. The Paypal debit card is an option available to many Paypal users that enables users to instantly pull money out of their Paypal accounts. Without the Paypal debit card it typically takes three to four days to transfer funds from a Paypal account into a bank account.

The process of using the Paypal debit card is virtually identical to using a debit card issued by a bank. It has a Mastercard logo so it can be used to pay for purchases anywhere that Mastercard is accepted. For those who prefer to have cash in hand, the card can be used at the majority of ATM machines located throughout Austraila and abroad. The daily ATM withdrawal limit is $400. Using the card to directly purchase items, however, gives a lot more flexibility as the daily spending limit is a robust $3,000.

A very useful feature of this debit card is that it can be linked through the user's Paypal account to other funding sources. So say, for example, that your Paypal account has a balance of $100 but you wish to purchase something that costs $125. If you've linked the Paypal debit card to a backup funding source, such as your bank account or another credit card, the merchant will get an approval when the Paypal debitcard is swiped. Paypal will then use the $100 in your Paypal account and take the additional $25 directly from your backup payment source. This takes away the guess work and also enables users to not have to utilize multiple payment sources while making purchase. As some merchant's don't even allow multiple payment sources, this is one of the most convenient options available through the Paypal card programme.

Users will also be able to take advantage of a cash rewards programme and certain purchases may be eligible for travel insurance and assistance and protection from damaged or lost items. The Paypal debit card is definitely a good option for Paypal users who have a large volume of money coming in and out of their Paypal accounts

Travel Debit Cards

For Australians planning a trip, a travel debit card can provide convenience and peace of mind while away. Accepted worldwide, a travel debit card is a convenient method of payment during travel both domestically and internationally. It also maintains accountability, whether traveling for business or pleasure.

Debit cards are a quick, easy way to make purchases. No longer do people have to deal with cumbersome travelers checks. Nor is it necessary to risk carrying large amounts of cash. Paper money is becoming obsolete, as debit cards are accepted at most locations.

In the uncommon case an establishment does not accept cards, an ATM is bound to be nearby. Having access to ATMs all over is a simple way to obtain cash as desired in low denominations.

During international travel, international exchange rates are no longer inconvenient as a travel debit card provides accurate exchange rates. Just swipe the card and your bank in Australia will exchange the currencies for you.

All of this convenience also comes with peace of mind. During travel, there is enough stress without having to be concerned about a budget and where the money will come from. By using a debit card instead of a credit card, the expenses are limited to the account’s assets.

If travelling for business with a credit card, often the individual is held liable for the card’s balance, as well as the company. This can be unsettling. Although unlikely, if the company goes bankrupt the employee becomes both unemployed and now has a high credit card bill. However, with a debit card only the assets the company possesses can be spent. There is no risk to the individual employee.

If enjoying a vacation, debit cards actually provide more fun than credit cards. While they may pay for the identical activities, a debit card pays immediately. In contrast, if a credit card is used then it may take months, if not years, to pay for the vacation.

By being directly linked to the account, a debit card provides accountability. With that accountability, worry disappears and people can truly enjoy their vacations

Balance Transfer Cards

Balance Transfer Cards

There are a couple of key reasons why a person would want to sign up for balance transfer cards.  One main reason is the ease of consolidating debt from multiples over to one credit card.  The bigger reason, a main benefit of a balance transfer card, is to receive a lower interest rate.  Obviously you would, or should, only transfer your balance from one card to another if the card you are transferring your balance to offers you a better deal and will save you money in the long run. 
Keep in mind that credit card companies are not necessarily looking to save you money by offering balance transfer cards to its potential customers.  They, instead, are looking to make money off you in the long run.  This doesn’t mean that a person who’s savvy with their finances can’t benefit from such offers. 
What a consumer really needs to be concerned with are the particular details of the card in question that will be there long after the 0% time period has lapsed. 

Below are some examples of popular credit cards that offer balance transfers:

CUA Gold Rewards MasterCard

This card offers a super low interest rate p.a. on all balances transferred from another credit card.  Some of the other perks of this card include: credit limits up to $25,000, 55 day grace period on accrued interest for all retail purchase, and Reward Points which will let you buy everything from electronics to airline tickets.

SunCorp Gold Card

The Suncorp Gold Card will allow you to transfer balances from a department store or another major credit card.  Those who sign up can receive a really low introductory interest rate.  Some of the other perks of this card include: frequent flyer points accumulation with Qantas Airlines, access to Visa Entertainment where you can take advantage of special offers and privileges, as well as complimentary travel insurance for you and your entire family when traveling abroad.

IMB Gold Rewards MasterCard Highlights

With the IMB Gold Rewards MasterCard you can expect to receive an interest rate of less than half the usual rate p.a. for the first 6 months.  There is also a free rewards program for cardholders which allows there to earn points for each dollar spent using their card.  The annual fee for this card is $99, which may be considered on the high end, but keep in mind the card limit can go as high as $25,000.

These are a sampling of the credit cards out there which do offer deals on transferring balances.  The main point to remember is that you have to look at more than just the introductory offers a credit card company is using to gain your business because these normally don’t last for long.  As stated in the beginning, the credit card company is looking to make money of you in the form of interest, annual, and late fees.  So no matter which one you choose, be sure to choose balance transfer cards wisely.

What is a Debit Card

Debit cards are also occasionally referred to as 'bank cards' or 'cheque cards', and those terms accurately describe their function and uniqueness.  Essentially, a Debit Card is an electronic cheque!

A small plastic card, resembling a credit card in appearance,  a Debit Card is used to make cash withdrawals from a bank account, or to pay for goods and services.  Your Debit Card may be linked to one or more bank accounts, into which you must deposit funds before you can use your card.  A 'prepaid' Debit Card is not linked to a bank account, but is 'loaded' with funds by over-the-counter payment or electronic transfer before use, and can be 'recharged' when necessary.

Importantly, when you use a Debit Card, you are spending your own money—not borrowed money (unless the card is linked to an account with overdraft approval).

To pay for goods in stores, you 'swipe' your debit card through a terminal.  To withdraw cash from your account, you insert it into an ATM.  You can quote the card number (generally with a password or Personal Identification Number) to make purchases over the Internet or telephone.  Many merchants offer 'cash out' or 'cash back' facilities, so that when you swipe your card to pay for your purchases, you can approve a payment for more than the cost of the goods and the merchant will hand you cash change.  Many users regularly request cash when making purchases, because doing so can cut out fees that may be charged for EFTPOS withdrawals.

Security is a major concern for shoppers, especially when shopping on-line.  Most debit cards are safe to use, and major Australian banks offer extra security features, including watching for suspicious transactions and guaranteed 100% refund of any unauthorised transactions.  Many banks impose a daily withdrawal limit as a further security measure. 

Debit cards are rapidly replacing chequebooks, because of their convenience and ease of use and low costs to use them.  Also, many come with exciting extra benefits like purchase insurance and reward points.

Debit cards come in a wide variety of 'flavours', with different features and options and different fee structures.  Some are designed specifically for electronic (Internet use), and no physical card is issued.  There are also special Debit Cards for travel, like Visa Passport, that let you 'load' the card before an overseas trip and withdraw your funds in foreign currency when you arrive at your destination.  These cards have largely replaced travellers cheques, offering superior convenience and security.

Card owners are usually issued with a Personal Identification Number used to verify their identity and authority to use the card.  This PIN (generally a four digit number) should be kept secret, and typed into a terminal or ATM or entered on to an Internet form to verify your identity when using the card.  Some Debit Card purchases can be confirmed with a signature.  Both methods provide good security, though it is important for card owners to keep their card somewhere safe and inaccessible to others, and to report any loss at once. 

Debit cards are a convenient substitute for credit cards, particularly for those who struggle to remember to pay bills or who find it easy to let spending get out of control.  Debit cards are also a convenient way to provide a fixed spending allowance to a partner,  employee, or offspring, giving them convenient access to funds when needed without the risk of incurring unmanageable debt. 

If you like the idea of not needing to carry cash, yet having ready access to your funds any time you need them, check out our guide to choosing the best Debit Card for your needs, and apply for a card now.  Most banks offer Debit Cards with all major savings and cheque accounts - or you can open a new account specifically to use with your chosen card.  Applications are quick and easy, and cards typically issue within a few days and are usable immediately.

So, now you know what a debit card actually is, why not compare Australian debit cards using the table on our homepage and find the right one for you!

Differences between Debit and Credit Card

Pay now, or pay later with interest?  That's the difference between a Debit Card (also referred to as a Debit Credit Card, Keycard, Handycard, Flexicard, Access Card or Cashcard, depending on the issuing bank) and a credit card.

Put simply, a Debit Card lets you spend your own money without carrying cash.  That's the main difference between a Debit Card and a Credit Card!

Debit card processing is often handled identically to credit card processing, requiring a signature to complete the transaction.  The alternate EFTPOS system, requiring a PIN (Personal Identiication Number) to be entered into a machine to verify your identity, is regaining popularity since changes to Australian law allowed merchants to charge fees for card transactions.  EFTPOS is free of merchant fees, but a bank fee may be imposed for each withdrawal, especially if the terminal used for withdrawal does not belong to the bank that issued the card.

Those who struggle to balance their budget, forget or struggle to find time to pay bills, or stress over owing money, should cut up their credit cards and apply now for a Debit Card from their preferred bank!

When you use a Credit Card, the difference is you are borrowing money from your bank, just as you would if your cheque account allowed an overdraft and you wrote cheques for more than the amount in your account.  Within a month of your purchase, your bank will send you a statement and ask that you pay at least a portion of the total amount owing.  If you pay the full balance immediately, you might not be charged interest.  Otherwise, interest charges will be added to the total owing—usually at high rates!   If you don't pay the required amount by the due date, heavy penalty fees apply!  Unless you are careful of your spending and diligent about bill paying, using a credit card can be expensive.  For many, using a credit card starts a 'debt spiral' that may be difficult to control and painful to end! 

A great solution for those who like the convenience of a card, but don't want to incur debt, the Debit Credit Card lets you use a swipe card (or numbers and PINs for phone or internet purchases) to spend your own money!   Immediately the seller processes your order, funds from your bank account are transferred to the seller.  You still receive monthly statements, but, like a bank statement, they detail the dates and amounts of withdrawals and show the remaining balance.  There is no bill to pay.  There is no risk of penalty charges for late payment.  No interest costs apply.  What's more, for those without an established credit history, a Debit Card may be easier to get.

You can also use most debit cards to withdraw cash from your bank account.  Conveniently, almost any ATM anywhere in the world will dispense cash in local currency on insertion of your card and entry of your private PIN.  Travellers enjoy the convenience of access to foreign currencies on demand, whenever and wherever  needed. 

Of course, you can use most debit card to pay for purchases both at home and abroad, so you don't need to carry foreign money to buy goods and services when travelling.  (If you are planning a trip abroad, forget traveller's cheques and apply for a Debit Card or Visa Passport instead!)

You can also use some Debit Cards to buy goods safely over the Internet, or to pay bills by telephone.  It's quick, convenient, safe, and inexpensive (although most users pay some fees for the convenience.)  

Especially for 'card not present' transactions—such as Internet purchases, where you can't physically insert your card into a machine—Debit Cards are safer than Credit Cards.  Any fraudulent transaction can access no more than the balance in your account.  Some security conscious 'net shoppers use a special 'prepaid' Debit Card account, keeping a nil balance until they want to make a purchase, then electronically transferring just enough to cover the purchase.   If you are nervous about shopping on the Internet, you may want to apply for a Debit Card to use this way.  Some banks even offer special debit card accounts (there may be no physical card involved) for Internet use.

Prepaid debit cards are also great for budgeting, and  for managing spending allowances of dependants or employees.

Australian banks offer a wide choice of Debit Card accounts.  Card features vary, so it is smart to compare cards to ensure you enjoy the best features available for your needs.  Visit our Debit Card Comparison table for advice on choosing the best card for your needs, then apply for your choice of Debit Card and start enjoying the convenience of debt-free shopping without carrying cash.

History of Debit Cards in Australia

Debit Cards date back to about the date of the introduction of e-commerce.  The first 'Switch card' transaction took place in 1988.  By 1995, Debit Cards had overtaken credit cards in popularity, and by 1998 Debit Card transactions were more common than cheque payments. 
 
In 1990 there were already over 19 million Debit Cards in circulation.  Rapid growth continued through to 2006, when circulation reached 27.8 million.  Although growth has slowed a little because of the market reaching saturation point, it is expected that 34.4 million cards will be in circulation by 2016.
 The most significant driver of growth in the Debit Card market was the advent of 'chip and PIN' technology, reducing the scope for fraud. 

Visa say the Debit Card is the fastest growing consumer product ever released by their company, with over 115 million people carrying a Visa-branded debit card and about 70 million people using their card every month!  By 2005, Debit Cards were used an average of 166 times per user annually. 
 
In the US, 82% of bank account holders have an ATM debit card. Worldwide, it is estimated that seven out of ten consumer households now have a Debit Card, and 53% of households use their card to make retail purchases monthly.  On average, consumers use their Debit Card nineteen times each month.  Figures released in the UK show that 109 billion pounds was spend using debit cards in 2007, compared to only 84 billion pounds cash and a measly 7.4 billion pounds using cheques.
 
In Australia, EFTPOS-enabled cards have been operating since the 1980s, and are now accepted at most swipe terminals that accept credit cards.
 
June 2008 surveys  revealed 13 million credit cards on issue in Australia, and 28 million debit cards.  The Commonwealth Bank is the largest issuer of debit cards, topping $10 billion in purchase volume.
 
With more than 20 billion transactions of less than $10 value now made yearly using plastic cards, we may be close to the point where cash will follow cheques into oblivion.  The popularity of Debit Cards, combined with rising global concern about credit card debt, might well see the Debit Card become the global standard of payment. 

What fees can I expect to pay?

If you want to use a debit card, it is likely you'll have to pay fees of some sort to your financial insititution.

These fees are generally for the account linked to the debit card rather than the debit card itself so you could argue that with many banks, there isn't actually a fee for having a debit card.  So often they may be similar to fees charged by the banks for a typical every day account.  As with all financial products it's important to take fees into account when choosing as a few dollars a month can make a significant difference to your choice of debit card - after all why pay something when you don't have to.  Thankfully in recent years competition has pushed down bank fees and debit card fees considerably so you can still get a fully featured debit card product without having to pay through the nose.

It's not all bad news though - in general the debit card accounts that charge higher fees tend to have more features (such as entertainment packages, card customisation etc) so if you do make use of these features, it can represent good value.  Most debit card providers will also waive their fees subject to the user making regular deposits or keeping a minimum amount in their account.  So by paying one's wages straight into the linked account you could never have to worry about bank fees again.

At the time of writing, standard Australian debit card fees for mainstream and 'fully-featured' products range from $3/month (with the St George Express Freedom Debit Card) to $18/month (for the ANZ Access Extras Card).  Certain providers will waive fees for pensioners, share-traders, share holders, students and more so please browse through our debit cards comparison table to help you make a decision!

What is the best Debit Card for me?

Debit Cards come in many 'flavours', so it is important to examine the features of each offering and choose the right Debit Card for your needs.  Often it's trying to work out a balance between fees and charges and the facilities and extras you want with your card.  Also important is to consider your existing banking institutions and whether they offer debit cards as it may save you from opening a new account. So please read through our guide below or for a fully featured all-rounder with super-low fees, take a closer look at our recommended debit cards offered by St George - the Complete Freedom and the Express Freedom

List your answers to the following questions to clarify your needs before considering the available choices.

• Do you need a card for use online only (eg as a PayPal Debit Card), or do you want a physical card for use in stores and to withdraw from ATMs?
• Will a prepaid Debit Card better suit your needs?  (Prepaid Debit Cards are easier to get, often more secure, and great for special purposes like travelling, managing spending allowances for children or expense allowances for employees, and separating funds for budget purposes but topping them up can be a pain)
• Do you travel often?  Will you use your card abroad?
• Do you do most of your banking via the Internet (including using PayPal), or do you prefer over-the-counter transactions?
• How do you plan to top up your account with funds?  Can you arrange a regular direct deposit of salary or investment income, or will you be depositing cash or making electronic transfers from other accounts?
• How many ATM and branch withdrawals do you expect to make monthly?
• Do you need to give other people a debit card to access your funds?
• How important are special benefits like purchase insurance, travel insurance, and extended warranties?
• Are you a lover of entertainment?  Would special access to entertainment events enhance your lifestyle?

Fees are of key importance to most people, but advertisements referring to 'no fee' or 'low fees' can be confusing.  Check the fine print and think about how you are likely to use your card.  Will you be making frequent withdrawals from ATMs?  Are you likely to be able to get to an ATM owned by your own bank for most withdrawals?  Will you be travelling and using your card in foreign countries?  What transaction fees apply for these services?  Fee-based accounts might work out cheaper than free accounts with higher transaction charges.

If choosing a fee-based account, always ask about fee concessions.  Students, pensioners, and veterans should take particular notice of fee concession offers.

Most issuers offer good security features, but it is wise to consider the reputation of the issuer carefully.  Is the issuer likely to honour guarantees to refund losses from unauthorised transactions?  Can you rely on the issuer for prompt and helpful advice and service if the card is stolen, you lose it, or you note suspicious transactions?  You should also consider how easily you can contact the issuer, especially if you plan to travel. 

Consider the features of the linked account(s).  Does the account suit your general banking needs?   Do you have a preference between Visa and Mastercard?

A choice of card colour and design is probably a minor consideration, but consider optional benefits— like discounts or special access to entertainment, insurances, and extended warranties—carefully. These benefits can be valuable!  Frequent travellers, for example, could save hundreds of dollars on travel insurance just by choosing the right Debit Card and using it to pay fares!    And how good would you feel if a costly item you just bought was stolen from your car and your Debit Card issuer offered to pay for full replacement?

If you're still not sure, then our recommendation would be either the Express or the Complete Freedom Debit Cards from St George.  They have one of the lowest fees on the market (if not the lowest) and even the basic card has enough features for 95% of debit card users.  So with a fee of just $3/month (this is even waived in some circumstances) make sure you put this card on your shortlist!

• St George Express Freedom Debit Card
• St George Complete Freedom Debit Card