5 signs for Australians that they're using the wrong credit card

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Like a set of keys, there’s no one-size-fits-all credit card. What’s important to one person, won’t be as important to the next.

A credit card that doesn’t suit your spending habits won’t offer you the most value. Here are the warning signs to watch out for:

1. You’re paying fees for a card you hardly use

Some of us like to keep our credit card in reserve. You may only use your card for emergencies or occasional spending, such as at sales time, or to pay for holidays.

If you don’t use your credit card often, then you’ll likely want to avoid credit card fees. After all, there’re not much sense in paying an annual fee for a credit card whose features you’re hardly using, right?

Even if you only sometimes make big purchases, these may take a long time to pay off. A low-interest credit card may help keep your costs down while you clear your debts.

2. You’re a good customer with nothing to show for it

If your credit card has interest-free days, you may never need to pay interest on your purchases. If you pay your card in full each month, you may want rewards, features and benefits more than a low interest rate.

Check if there are reward credit cards available that suit your spending patterns. If you often use your card at one of the major supermarkets, their affiliated credit cards may reward you for it.

If you can afford to spend and repay $5,000 or more per month, you may be in the market for a card with features and perks. These rewards can include:

  • Free travel insurance
  • Concierge services
  • Cash back
  • Frequent flyer points

Keep in mind that rewards cards often have higher annual fees, so try to choose rewards that are worth the cost.

3. You’re not making the most of your current card

Credit cards with special perks and features can be valuable to the right borrower. But what if that borrower isn’t you?

Generally, the more bells and whistles on a credit card, the higher its interest rates and fees. If you aren’t redeeming reward points or benefits, these features may not be worth the cost.

You may want to consider a no-frills credit card that offers everything you need and nothing you don’t.

4. You struggle to pay off your credit card each month

Do you treat your credit card like a debit card, putting most of your everyday purchases on your plastic? This can mean regular interest charges, and lead to struggles to pay off your increasing debt.

If this sounds like you, you may prefer a low rate card with a very low or no annual fee. This can help keep your card’s costs down and help keep your debt from spiraling out of control.

5. You’re stuck in a debt trap

Is your credit card charging interest on your debt faster than you can afford to pay it? You may be stuck in a debt trap.

One option to consider is a balance transfer credit card. This moves your debt onto a new card that charges low or zero interest for the introductory period. While your debt isn’t growing, you can concentrate on paying it off.

After you transfer a credit card’s balance, consider cancelling the original card. This can help you avoid the temptation to run up more debt.

Once the intro period ends, you’ll have to start paying interest on any remaining balance. The credit card may revert to a much higher interest rate, which could be expensive for you. To avoid more financial trouble, try to clear your balance during the intro period.

Here’s a look at some of the top credit card options:

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