21 Mar 2023 | Blog

How much do you know about credit?

credit cards

In Australia, credit is a ubiquitous part of modern life. From credit cards to personal loans, car finance to buy-now-pay-later schemes, the world of credit is diverse and ever-expanding. According to Finder.com, there are currently over 13 million credit cards in Australia, with an average balance of $3,000. With increasing numbers of retailers choosing to decline cash payments, life without credit can be extremely difficult.

However, while credit can be a convenient way to transact, it can also lead to financial difficulties if not used wisely. To help you navigate the world of credit, here are some important facts to keep in mind.

1. Maximise your interest-free period on credit cards

The interest-free period on a credit card refers to the days when interest is not calculated on your purchase. To maximise your interest-free period, check the billing date on your card statement and time large purchases accordingly.

2. Payday loans can be costly

Payday loans are one of the most expensive forms of credit available. The high cost to the consumer is the lender’s way of clawing back some of its losses in the event of a default. It’s important to read the fine print thoroughly before signing up and explore alternative loan options if possible.

3. Check your credit score before applying for a payday loan

Checking your credit score before applying for a payday loan can be beneficial. Other less expensive forms of credit may be available to you if your credit score is better than you think.

4. Beware of late payment fees with buy-now-pay-later schemes

Buy-now-pay-later schemes are interest-free, but there’s a catch. Repayments are automatically deducted from your nominated bank account or credit card, and if you default on a payment, you may be charged a late payment fee or overdrawn fee.

5. Access interest-free loans through the No Interest Loan Scheme (NILS)

State governments provide interest-free loan assistance for amounts up to $2,000 through the NILS. These loans are a form of community lending, funded by the banking sector and accessed via recognised charities. They are quick and easy to apply for, with no fees, charges, or interest, but can only be used for essential goods or services.

6. Lenders assess all credit card limits when you apply for a loan

When applying for any kind of loan, lenders will assess the combined credit limits of all your cards to ensure you can support the repayments. It’s a good idea to cancel any cards you don’t want to be included in the assessment.

7. Consolidate credit card balances for easier repayment

You can consolidate the balance of multiple credit cards onto one new card with 0% interest for an introductory period. This is a great way to clear your credit cards quickly, but it’s important to understand the terms and conditions before signing up.

8. Understand the risks of secured loans

Any form of finance that requires collateral is considered a secured loan. It’s important to understand the terms and risks before taking out a secured loan, such as a mortgage.


Credit is a powerful financial tool that can help you achieve your goals, but it’s important to use it wisely. By understanding these key facts about credit in Australia, you can make informed decisions about your finances and avoid potential financial pitfalls.

The information contained on this website has been provided as general advice only. The contents have been prepared without taking account of your personal objectives, financial situation or needs. You should, before you make any decision regarding any information, strategies or products mentioned on this website, consult your own financial adviser to consider whether that is appropriate having regard to your own objectives, financial situation and needs.

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