How to choose a credit card: Have you considered it correctly?

With New Zealanders collectively owing around $6.5 billion on credit cards, there’s no doubt that many of us have at least a mild addiction to the plastic. So choosing a card that suits your spending and saving habits is essential. Jessica Bailey, founder of Debt to 10k, shares five tips for choosing a card.


With so many different credit cards on offer, choosing the right option for your needs isn’t always easy. Credit cards can be a great lifestyle convenience, but they can also be dangerous if used improperly. At age 22 I used a credit card to travel around Europe, resulting in a large debt.

I had to make huge lifestyle changes to pay off my credit card quickly, so if you aren’t prepared to do this, these handy hints might prevent you from getting into that position in the first place.

  1. Why do you need it?

Why do you want a credit card in the first place? Do you really need fast money for something important or are you impulse buying something that can wait until you save the money for it? Is it “just for emergencies”?

Think about what you will be using a credit card for before choosing the right one for the job. It’s great to have a security plan in place in case you really need access to money, but you need to make sure that you really use it as a last resort (for example, medical bills or a broken fridge). Avoid relying on your credit card for ‘quick fixes.’ Working out exactly why you want a credit card will help you choose one that suits you (if you really need one).

  1. How will you pay it off?

Do you realistically intend to pay off the credit card balance each month before incurring interest? If yes, your interest rate won’t matter as much, so you can afford to assess low fee cards.

If not, look for low interest rate cards. (Canstar note: currently on our database, it’s possible to find ongoing credit card rates of less than 13%).

  1. Credit card insurance

Credit card issuers may offer you credit card repayment insurance when you are approved for a card, which covers you for the balance in the event you can’t make payments due to illness or redundancy. This may seem like a good option to cover your repayments in the case that you are not able to do so, but it is also an additional expense. Think about your reasons for getting the card and really consider if you need this added cost.

  1. Balance Transfers

If you are going to transfer a balance on your credit card to a low interest card promotional deal, you need to consider whether you can realistically pay off the balance in the promotional period. Work out how much you would have to pay per month and set up automatic payments.

If you can’t afford that amount each month, check that you are able to afford the interest rate that you will revert to at the end of promotional period. It may be higher than if you transferred to a regular low-rate card.  Make a budget and stick to it!

  1. Incentives

Many credit card issuers offer reward programs to their customers as an incentive to use the card. In my experience, these aren’t really a great option for the everyday spender who has a running balance that accrues interest. The interest and fees on these cards usually outweigh any rewards unless you spend upwards of $15,000 a month on the card (which is not a good idea for the everyday person). Personally, I stay away to avoid getting hooked on what might seem like a tempting offer.

About Debt to 10k:

Debt to 10k is a free for members service which aims to help Australians, earning any level of income, to clear bad debts before they find themselves in financial hardship. Debt to 10k aims to educate and empower Australian’s to take control of their financial futures by creating realistic tools and action plans. Debt to 10k’s founder has experienced the pain of paying off debts and works with members to help them achieve realistic short term goals. It doesn’t matter how much bad debt you’re in, our tools will work out how we can help you to pay it off and achieve a $10,000 savings goal. Find out more about how to take control of your finances or join the Debt to 10k network at:

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