Getting a credit card can sometimes get complicated, especially if you are inundated with a lot of promotional offers, perks, benefits, and fees. These could overwhelm you and can taint your judgment in terms of whether to get one or not.

To keep things simple, here’s what to consider to help you decide whether getting a credit card fits your financial strategy, especially if you are a homebuyer.

Type of credit card

A credit card can either have interest-free days or not — this is an important consideration given that your financial behaviours can impact the give one option a greater advantage than the other.

Credit cards with interest-free cards tend to have a higher interest rate, charged from the day you purchase your goods or services or from the statement date unless the whole amount is paid in full within the interest-free period.

For cash advances, interest is applied immediately and there are generally higher annual fees for these cards. They will also include any number of rewards and benefits – you just have to make sure these rewards and the interest saved are worth the fees charged.

These cards are ideal for those people who are disciplined enough to pay off the balance in full each month and can avoid cash advances.

On the other hand, credit cards with no interest-free days have a lower interest rate charged from the date of purchase and generally have lower fees. They also usually come without add-on benefits like reward programs. These cards are ideal for those who do not pay off the balance from month to month.

Your choice of credit card depends on your behaviour and needs. If you can pay off the balance every month and you do not have an outstanding balance monthly, the interest is probably not that important to you.

Credit limit

When you apply for a credit card, you will need to factor in the minimum and maximum credit limits. While not all providers provide a minimum threshold, every provider sets a maximum limit.

Lenders determine your credit limit based on these factors: annual income, credit history, existing debts, and employment status.

If your lender allows you to initially request a credit limit, you must suggest having a limit equal to only 50% of your monthly income. You can always request your provider to increase your credit limit in the future if you meet their requirements.

Be careful with your maximum credit limit, as this would significantly impact your future application for loans.

When taking out a home loan, for instance, your lender will factor in your total credit limit as an outstanding liability. This would substantially reduce your borrowing power.


Another crucial consideration when getting a credit card is the fees.

Be careful of how you use the card and make sure all fees and charges are disclosed by your lender.

Common credit card fees can include:

  • Annual account fees

  • Rewards program fees

  • Late payment fees

  • Payment dishonour fees

  • Charges for exceeding your credit limit

Loyalty points and rewards (cashback)

When considering the right card for you, think about what you will use it for. If it is to be used solely for irregular purchases of things like petrol, dining out, or occasional small purchases and you do not want the added benefits such as reward programs, it is probably not worth paying extra.

Cards with rewards programs generally have higher interest rates and fees and are more suitable for those who pay off their balance within the interest-free period and who use their card a lot. If you carry over a significant balance on your account from one month to the next you will probably lose more in interest charges than you would gain from any rewards earned. Therefore, a no fee, low interest, and no-free-days card might be a better option.

On the flip side, if you want the benefits of a higher interest card with a fee, and you intend to pay off the balance by the due date, choose the card that has the lowest annual fees or the benefits that best suit your lifestyle. Benefits can include frequent flyer and loyalty programs, discounts on mortgage fees, travel, or purchase insurance.

Part of the package

If you are planning to apply for a home loan and a credit card, then it could be worth considering getting a bundled home loan or a packaged deal.

A home loan package includes your home loan and other financial products like credit cards.

Lenders often offer lower fees for your home loan and credit cards if you avail these products in a bundle.

However, you should still shop around for better deals in the market, as some credit cards offer a more competitive interest rate if they are standalone.

You also have to consider the annual fees — while packaged deals typically offer lower fees for financial products, you still have to check if the annual fees are worth it.

Also read:

How can credit cards impact your home loan

How to manage your credit card debts