03 Best Options Credit Card for Bad Credit

Do you need a credit card for bad credit? With a market full of options, it’s entirely possible to get a good card, even if you have a bad credit history.

Now, what’s the best credit card for bad credit? That depends on what you’re looking for. Each alternative is better suited for a different type of consumer. But don’t worry, today you’ll learn about the options in just a few minutes.

In this article, we’ll explore the main factors to consider when comparing credit cards in Australia. Helping you understand the different types of cards available and what each one offers.

How do credit cards for bad credit work?

Let’s understand what happens behind the scenes.

The Australian financial system is regulated by an important law, the National Consumer Credit Protection Act 2009.

Basically, this law obliges banks to be responsible when granting credit, assessing whether you can really afford to pay the debt.

In other words, the idea of a deposit as collateral to get a card becomes irrelevant.

Banks need to assess your income and your real financial situation. It’s not that they don’t want to help, but the law doesn’t allow them to offer a product without being sure you can pay.

That’s why, in Australia, banks don’t offer secured cards. This is a direct consequence of the law.

Alternatives that Really Work

Now, let’s get to what matters: what are the options?

The main and most intelligent strategy is to get a no-frills credit card.

We’re talking about cards with low or zero annual fees and a conservative credit limit.

Using this type of card with discipline, paying the bill in full every month, is the key to building a positive credit history.

In addition to entry-level cards, there are other alternatives.

Secured personal loans are an option where you offer an asset, such as a car or property, as collateral. This significantly increases your chance of approval, especially if your employment situation is informal.

Detailed analysis of credit cards for bad credit

The big banks in Australia don’t create specific products for people with bad credit history.

Instead, they direct these customers to their entry-level cards.

The logic is simple: low or zero annual fees and minimum credit limits.

However, the responsibility of using the card correctly and avoiding interest is entirely in your hands. With that in mind, let’s look at the options.

1. ANZ Bank

ANZ Bank is one of Australia’s “Big Four,” with a history of almost two centuries.

The ANZ Low Rate credit card is their entry-level product, known for having the bank’s lowest interest rate, 13.74% p.a. for purchases.

It has an annual fee of $58 and a minimum limit of $1,000.

While the bank’s reputation is solid due to its history, customer satisfaction on review sites like Finder is slightly below the market average.

2. St.George Bank

St.George Bank started as a building society in 1937. Today, it’s part of the Westpac Group, but maintains its distinct brand.

The St.George No Annual Fee card is a no-annual-fee option, perfect for those looking for something basic.

With a minimum credit limit of just $500, it’s a low-risk choice for those starting out.

The problem, however, is the high interest rate: 20.99% p.a. for purchases.

Consumer reviews show it’s seen as an ’emergency card,’ but the high interest rate is a concern.

3. Bankwest

Bankwest started in 1895 to support farmers.

It was privatized and then bought by Commonwealth Bank in 2008.

The Bankwest Zero Mastercard is a no-annual-fee option that stands out for digital innovation.

You can use a ‘virtual card’ instantly, even before the physical one arrives.

How to resolve card problems in Australia?

Often, we hear about complaint websites, but the consumer protection system in Australia is different.

The main entity is the Australian Financial Complaints Authority (AFCA). It functions as an ombudsman, which is independent and free to resolve disputes between consumers and financial institutions.

The complaint process has two steps.

First, you try to resolve the problem directly with the bank.

Banks are required by law to have an internal resolution process and to respond to your complaint within 30 days. If you are not satisfied with the response or if the bank does not respond, you can take the complaint to AFCA, which is the external resolution entity.

AFCA has the power to make binding decisions for the bank, which is a tremendous advantage for the consumer, as it avoids the need for a judicial process.

Frequently Asked Questions

1. How do I check my credit score in Australia?

You can request your credit report for free once every 12 months. Just contact the main credit reporting bodies: Equifax, Experian, and illion.

2. What damages my credit score?

Late or missed payments are the worst villains.

They can stay on your record for up to seven years.

Multiple credit applications in a short period are also not a good idea, as they generate ‘hard inquiries’ that banks see as a sign of risk.

3. How do I effectively improve my credit?

The answer is discipline. Pay all your bills and debts on time.

A tip is to set up automatic debits so you don’t forget. Regularly checking your credit report to find and correct errors also helps a lot.

4. Is it better to have a low-limit credit card or a personal loan?

It depends on what you need.

A low-limit credit card is great for building history with small purchases and on-time payments.

A personal loan is better for a specific goal, such as buying a car.

Conclusion

Ultimately, seeking a credit card for bad credit in Australia is not easy.

The market simply doesn’t have such a product. What you need to do is redirect your focus to alternatives that really work, like entry-level cards from major banks. With this in mind, we’ve selected the best no annual fee credit card, where you can learn about entry-level cards in detail.

Choosing the right card, whether it’s a low-annual-fee one like ANZ’s, a no-annual-fee one like St.George’s, or one focused on innovation like Bankwest’s, is just the first step.

What will make the difference is how you use that card.

Paying the bill in full and on time is the only way to turn that plastic into a credit rebuilding tool, and not a problem.