Australian credit cards: the full picture

• A. A debit card draws on your own bank account funds, while a credit card lets you borrow money from the card provider. ✓
• B. A credit card can only be used in Australia, while a debit card works overseas.
• C. A debit card charges interest on purchases, while a credit card does not.
• D. A credit card requires a cash deposit before you can use it, while a debit card does not.

Why: A debit card takes money directly from your linked transaction account, whereas a credit card gives you a revolving line of credit from the provider that you repay later, usually with interest if you don't pay the full balance by the due date.

• A. The minimum amount you must spend each month on the card.
• B. The maximum amount you can borrow on the card at any one time. ✓
• C. The interest rate applied to your outstanding balance.
• D. The number of transactions allowed per billing cycle.

Why: The credit limit is the maximum balance the lender allows you to carry on the card. Exceeding it can result in fees or declined transactions, depending on the provider's terms.

• A. The full outstanding balance, which must always be paid in one go.
• B. The smallest amount you must pay by the due date to avoid a late payment penalty. ✓
• C. The annual fee charged by the card provider.
• D. The amount of cash you withdrew using the card that month.

Why: The minimum repayment is the lowest payment accepted by the due date to keep the account in good standing. Paying only the minimum usually leaves a balance that accrues interest, so paying in full is cheaper.

• A. Free cash withdrawals from any ATM for the whole year.
• B. No interest charged on purchases if you pay the full statement balance by the due date. ✓
• C. A waived annual fee for the first twelve months.
• D. Unlimited credit increases without a credit check.

Why: Most Australian credit cards offer an interest-free period on purchases, typically up to around 55 days. You avoid interest on those purchases as long as you clear the full statement balance by the due date. Cash advances usually do not have this benefit.

• A. They guarantee every applicant is approved for a credit limit of at least $10,000.
• B. They require lenders to assess whether a credit limit is unsuitable for the applicant, helping prevent people from being given debt they cannot afford. ✓
• C. They set a fixed interest rate that all credit cards must charge.
• D. They allow cardholders to cancel their card at any time without paying any fees.

Why: Under the National Consumer Credit Protection Act, lenders must make reasonable inquiries into your financial situation and assess whether a credit card is suitable before approving it. This protects consumers from unaffordable borrowing.

• A. The fee charged each time you make a purchase
• B. The annual interest rate charged on balances that are not paid in full by the due date ✓
• C. The monthly service fee for holding the card
• D. The percentage of each purchase paid back as rewards points

Why: The purchase rate is the annual percentage rate (p.a.) of interest applied to outstanding balances carried beyond the interest-free period. Interest is usually charged daily on the balance and added monthly, so paying the full statement balance by the due date typically avoids it.

• A. The time between your statement date and the payment due date, during which no interest is charged on new purchases if you paid your previous statement in full ✓
• B. A 12-month period where the card charges no annual fee
• C. The first 30 days after you open the account, regardless of how you use it
• D. The period during which a balance transfer is processed

Why: Most Australian credit cards offer an interest-free grace period of up to about 55 days from the purchase date to the payment due date, provided you have paid the previous statement balance in full. If you carry a balance, this interest-free benefit is typically lost until the balance is cleared.

• A. A fee for paying your bill on time
• B. A fee charged for withdrawing cash using your credit card, often in addition to a higher interest rate that starts accruing immediately ✓
• C. A fee for requesting a higher credit limit
• D. A fee for replacing a lost card

Why: Cash advances usually attract a fee (commonly a percentage of the amount withdrawn or a flat minimum) and interest starts accruing from the day of withdrawal, with no interest-free period. The cash advance rate is often higher than the purchase rate.

• A. Moving money from your credit card into a savings account
• B. Shifting an existing debt from another credit card to your current card, which may come with a promotional low or 0% rate for a set period, usually subject to a transfer fee ✓
• C. Transferring ownership of your card to another person
• D. Sending money overseas using your credit card

Why: Balance transfers let you move debt from a higher-interest card to one with a lower promotional rate. These usually carry an upfront transfer fee (often 1-3% of the amount), and the promotional rate reverts to the standard purchase rate after the promotional period ends.

• A. A late payment fee ✓
• B. An annual fee
• C. A foreign transaction fee
• D. A balance transfer fee

Why: Missing the minimum repayment or the due date usually triggers a late payment fee, and it can also affect your credit record. Annual fees and foreign transaction fees are charged on different events, and balance transfer fees apply only when moving debt between cards.

• A. The annual fee
• B. The purchase interest rate (p.a.)
• C. The rewards points earn rate
• D. The credit limit

• A. Cash advances only
• B. Balance transfers only
• C. New purchases, provided the full statement balance is paid by the due date
• D. Annual fees and card replacement fees

• A. Making a purchase in store with a tap-and-go payment
• B. Withdrawing cash at an ATM using the credit card
• C. Paying the full statement balance on time
• D. Receiving a statement by email

• A. Low rate cards cannot be used for purchases
• B. Because they pay no interest anyway, the low rate offers little benefit while the annual fee is an unnecessary cost
• C. Annual fees are refunded only if the balance is paid in full
• D. Low rate cards have lower credit limits

• A. Approve the application automatically if the applicant is over 18
• B. Make reasonable enquiries about the applicant's financial situation and assess whether the card is unsuitable
• C. Require a fixed deposit equal to the credit limit
• D. Check only the applicant's employment history

• A. A fixed cash amount that is always exactly one cent
• B. A unit of value the card issuer assigns to spending, redeemable for goods, travel, or statement credit
• C. A discount applied automatically to your interest rate
• D. A government-issued loyalty credit that cannot be transferred

• A. By paying their balance late
• B. By making eligible purchases using the card
• C. By withdrawing cash at ATMs
• D. By holding a balance that accrues interest

• A. The number of points needed to open an account
• B. The approximate cash or dollar worth of one point when redeemed
• C. The interest rate charged on points balances
• D. The maximum number of points you can earn per year

• A. Because the second program has no annual fee
• B. Because the points value determines the actual cash worth of the rewards earned
• C. Because the first program does not accept online purchases
• D. Because points in the second program expire faster

• A. Paying the full statement balance each month
• B. Carrying a balance and paying interest that exceeds the value of points earned
• C. Redeeming points for statement credits when they become available
• D. Comparing points values across different cards before applying

• A. The minimum amount you must repay each month
• B. The maximum amount you are allowed to borrow on the card at any one time ✓
• C. The interest rate charged on purchases
• D. The number of years the card remains valid

Why: A credit limit is the maximum amount the card provider lets you owe on the card at any given time. Going over it can incur fees and may hurt your credit score.

• A. Paying your full statement balance on time every month
• B. Keeping your credit utilisation low
• C. Regularly missing or paying late on credit card repayments ✓
• D. Checking your own credit report

Why: Missed or late repayments are a negative signal to credit reporting bodies such as Equifax, Experian and illion, and can significantly reduce your credit score. Checking your own report does not affect your score.

• A. The percentage of your credit limit that you are currently using ✓
• B. The total interest you pay over a year
• C. The number of credit cards you hold
• D. The fee charged for exceeding your limit

Why: Credit utilisation is the proportion of your available credit limit that you have used. Keeping it low, generally well below 30 percent, is viewed favourably by lenders and credit scoring models.

• A. Higher limits always have lower interest rates
• B. It may signal increased borrowing capacity and risk, so lenders assess your ability to repay ✓
• C. Higher limits are automatically cancelled after one year
• D. Lenders are legally required to refuse all limit increases

Why: Before increasing a limit, lenders assess your income, existing debts and repayment history, because a larger limit increases the amount you could owe and the risk of default.

• A. Equifax, Experian and illion ✓
• B. Visa, Mastercard and Amex
• C. ASIC, APRA and ACCC
• D. Centrelink, Medicare and the ATO

Why: Equifax, Experian and illion are Australia's main consumer credit reporting bodies. Visa, Mastercard and Amex are card networks, while ASIC, APRA and ACCC are regulators and Centrelink, Medicare and the ATO are government agencies.

• A. The bank removes your credit limit after one minimum payment
• B. Interest continues to accrue on the remaining balance, so the debt takes much longer to clear and costs far more in total
• C. Minimum payments are reported to credit bureaus as a default
• D. The card provider charges a fee each time you pay the minimum

• A. A period during which the card cannot be used for purchases
• B. A period after a purchase during which no interest is charged, provided the full statement balance is paid by the due date
• C. A period in which the annual fee is waived
• D. A period when the card provider pauses your repayments

• A. Spend up to the full credit limit each month to earn maximum rewards
• B. Only make purchases you can afford and pay the full statement balance by the due date
• C. Take cash advances whenever you need quick money
• D. Pay only the minimum repayment and make up for it later with a balance transfer

• A. A discount on cash purchases; it should be used often to save money
• B. Withdrawing cash using your card, which usually incurs a higher interest rate from the date of withdrawal, plus a fee, with no interest-free period
• C. A bonus credit given when you pay your bill early; it has no downside
• D. A loan from the government for emergencies, with no interest

• A. Paying the full statement balance on time every month
• B. Using a credit card only for planned purchases you have budgeted for
• C. Regularly using one card to pay off another, or struggling to make minimum repayments
• D. Checking your statements to track your spending

• A. Wait one full billing cycle to see if the charge is reversed by the merchant
• B. Contact your card issuer immediately to report the transaction and request a block or replacement card
• C. Pay the amount in full to avoid interest charges while you investigate
• D. Ask the merchant to refund you directly before telling the bank

• A. You are liable for the full amount of all transactions made after the card was lost
• B. Your liability is generally limited, and you typically are not liable for losses from unauthorised transactions once reported
• C. You are always liable for up to $1,000 regardless of when you report
• D. Liability depends entirely on whether the merchant chooses to refund you

• A. A fee the bank charges when you exceed your credit limit
• B. A process where the card issuer reverses a transaction and refunds the cardholder, often for disputed or fraudulent purchases
• C. Interest charged on balances that are not paid by the due date
• D. A penalty imposed on merchants who process payments incorrectly

• A. Saving your card details in every website you use to speed up checkout
• B. Sharing your card PIN with a trusted friend in case of emergencies
• C. Only shopping on secure websites (look for https and a padlock) and monitoring statements regularly
• D. Responding to emails from your bank that ask you to confirm your card number

• A. Your bank sends a monthly statement by email as usual
• B. An unexpected message creating urgency, asking you to click a link or provide card details to 'verify' or 'unlock' your account
• C. You receive a notification about a payment you recently made
• D. Your bank reminds you of your payment due date before it arrives