Credit cards are crucial for every business or individual to manage finances. Most often people with bad credit find it difficult to get a credit card. If that's the case for you, do not worry because it doesn't mean game over because these instant approval credit cards for bad credit in Australia will get you back on banking track.
Instant Approval Credit cards are an excellent strategy to improve your credit score. There aren't many credit card options available in Australia for people with bad credit. Although this is an option, it is critical to carry out research on the different issuers that may suite your need before applying. Interest rates, annual fees, and your credit score should all be taken into account.
Bad credit doesn't sound good neither for banks nor lenders because this tells them you are not someone to be trusted when finances are concerned.
People with bad credit have a considerably higher probability of being rejected by reputable lenders, who will check at their credit score before approving or rejecting them for a credit card. This is a difficult position to be in.
It can be discouraging to be denied by a bank, but don't despair; it is entirely possible to get approved for a credit card even if you have bad credit. You'll just have to be a little more cautious and make a few concessions.
That said, this article compiles the best credit cards for bad credit Australia instant approval that you may apply for and get approved within no time.
What is a Bad Credit Score?
A credit score is usually in a scale of 300 to 850. The average credit score or Equifax Score (previously VedaScore) in Australia is 550. A bad credit score in Australia is the score below 500 and scores below 400 are considered to be very bad. As per homeloanexperts.
According to ASIC, Australia has four official credit reporting agencies:
These credit bureaus keep track of your borrowing and repayment history, as well as any bankruptcies, debt settlement agreements, and court judgments. When you apply for a loan, credit and loan providers will consult one of these companies to obtain information from your credit report in order to determine how trustworthy you might be as a customer.
There will be a final figure called a credit score on a person's report, which can range from 0 to 1,200 depending on which agency is used.
What Causes Bad Credit Scores?
A variety of factors pertaining to lending and credit products can boost or drop credit scores. Missed credit card, home, personal, and car loan installments, as well as utility bill obligations, are major issues. If they're under $150 or less than 60 days past due, they won't be documented on your credit report, but if they are, they can stay on file for up to five years.
Paying on time, every time can practically assure that this won't happen, but credit agencies can still make mistakes. If these mistakes aren't caught, you're out of luck, which is why you should check your credit report at least once a year for discrepancies.
Other factors that can lower your credit score are:
- In a short period of time, applying for too many credit cards, balance transfers, and loans
- Too many credit cards, balance transfers, and loans have been denied in a short period of time.
- Overspending your credit limit
- Debts that have not been paid are being pursued in court.
- Declaring yourself bankrupt
- Having a spouse or partner default on a debt for which you are both accountable
But do you want to know what the actual kicker is? When you apply for a loan or credit product and are denied, it will appear on your credit report for up to 12 months, and it can really impair your prospects if you do so frequently. This is why, if you have bad credit, you should be cautious when applying for a credit card.
What are Instant Approval Credit Cards?
Credit cards with instant approval are simply what they sound like. Because of the quick response time, Instant Approval Credit Cards are often only available online. Applying for this type of credit card can take up to five minutes, with a 60-second response time.
Isn't it simple and convenient? Because the response time is almost instantaneous, candidates should not expect excellent outcomes. During the application procedure, Instant Approval Credit Cards will still do a credit check. Specific criteria will be revealed, including as income, job, and payback history. Let's go through what applicants should think about before applying for an Instant Approval Credit Card in more depth.
How to Get a Credit Card With Bad Credit
A poor credit score may leave a blemish on your record with some lenders, but it is ultimately up to them, not a figure on a piece of paper, to decide whether or not to approve you.
The Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry found that some banks were overly generous in their credit assessments (perhaps too generous! ), but they must adhere to strict guidelines, and you should be conservative in your estimates in most cases.
Credit providers are required by law to lend you money responsibly, therefore it will likely be in their best interests for them to deny you unless you can demonstrate your ability to make repayments.
If you have a poor credit score but no or few debts, a decent salary, and some savings, you should apply for a more basic 'no frills' credit card, particularly one with minimal income requirements and low interest rates.
We can see that a couple 'low rate' credit cards have a minimum income criterion of $15,000, which is around the industry standard for what you could need.
If your annual income is less than this, you may need to look into other options, however you may still be accepted if you've paid off all of your previous obligations and can demonstrate good savings habits.
What to Consider Before Applying for Credit Cards for Bad Credit in Australia
Instant Approval Credit Cards are a good alternative for people with bad credit, but there are a few things you should know before applying. It's crucial that you base your research according to your demands and current credit score. There is no space for bargaining with Instant Approval Credit Cards because they have an instant response time, especially for people with poor credit.
While considering Instant Approval Credit Cards, keep the following in mind:
- Credit Score — It's crucial to know your current credit score as an applicant. The interest rate you obtain and the credit limit you receive will be determined by your credit score. If you have strong credit, you have a better chance of getting a cheaper interest rate and a bigger credit limit. If you have negative credit, on the other hand, you should expect a higher interest rate and a lesser spending limit.
- Interest Rates — When your debt is not paid off, it's crucial to know the interest rates offered. Instant Approval Credit Cards often have higher interest rates if you have bad credit, so it's essential to pay off your bill as soon as possible. For balance transfers, most cards offer 0% interest for the first 12-15 months. You can pay off any balance transfers until the interest rates are added to your repayment if you have this benefit.
- Annual Fees — Approval of Some Interests While some credit cards have no annual membership fees, some do. If you intend to have your card for a long time, be sure you know what yearly fees are required. Annual membership fees may or may not be a concern for many applicants.
3 Best Credit Cards for Bad Credit Australia Instant Approval
A bad credit shouldn't be a hinderance for you to get on banking track. Here are 3 best instant approval credit cards for bad credit in Australia:
1. ANZ Low Rate Credit Card
This card comes highly recommended since it has a low purchase interest rate of 12.49% and 15 months of free interest on balance transfers. It's also a great pick because it has a low minimum income requirement, making approval easy.
Apart from the low-interest rate, this card does not offer any intriguing offers or programs. This option is ideal for customers who have exceptional credit because it allows them to make a balance transfer with no interest for 15 months.
2. Citi Clear Platinum Credit Card
With a low purchase interest rate of 12.99 percent and 14 months of no balance transfer interest charges, the Citi Clear Platinum is another great alternative.
However, for the first year, there is no annual membership charge; after that, it costs $99 per year. This card does, however, come with a number of complimentary platinum insurance covers and advantages, which sets it apart from the competition.
3. ANZ First Credit Card
For those with bad credit who are actively paying off debt, the ANZ First Credit Card is highly recommended option. The purchase interest rate is high at 19.74 percent because this card is primarily for people with bad credit. The cheap annual membership cost of $30 and 0% balance transfer interest rate for the first 18 months make this an excellent choice.
Those who are struggling to pay off debt can now clear their balance month to month without collecting additional interest thanks to the 18-month interest rate on balance transfers. This will help you to rebuild your credit without having to worry about interest.
Other Alternatives for People with Bad Credit
If should in case you don't get approved for a credit card with bad credit, consider checking the other options below:
For starters, don't feel obligated to use a credit card when a debit card from your bank may be used just as effortlessly and without the risk of accumulating debt.
You can't spend money if you don't have it in your account! Prepaid credit cards are also available; these allow you to load money on the card ahead of time and withdraw it whenever you want without paying interest, but you could argue that a debit card is a better option.
You can also take out a personal loan, as there are products available that cater to persons with bad credit. While you may not have trouble getting approved, the lower your credit score, the more likely you are to be hit with exorbitant rates and fees. However, if you need money quickly, a bad credit personal loan may be able to help.
Payday loans (small-dollar loans) should be avoided at all costs, as they can impose high rates. While the offer of "fast cash" may seem appealing, there are often far better alternatives. If you're having trouble, go to a financial counsellor (a free service available to the public) or call the national debt helpline at 1800 007 007.
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Can I Get a Credit Card Without a Credit Check in Australia?
You can only apply for a credit card in Australia if you consent to a credit check. Unfortunately, there are no credit cards that guarantee approval, but you may increase your chances of approval by ensuring that you meet the eligibility conditions and providing as much information as possible on your application.
In Australia, products that don't require credit checks are typically limited to payday loans, which throws up a whole new can of worms. These loans are primarily aimed for those with bad credit who require $2,000 or less in a short period of time and have a high interest rate.
Payday loans have recently come under fire from consumer activists for their alleged "predatory nature," and are currently the subject of a Senate investigation. Payday lenders are currently subject to some quite rigorous rules. ASIC says that:
- They are not allowed to charge interest on the loan
- They can charge a maximum establishment fee of 20% of the loan amount
- They can charge a maximum account keeping fee of 4%
- They can charge a maximum default fee of 200%
However, the rise of up-and-comers like Afterpay and Zip has sparked new concerns in the business. These lenders allow clients to buy products and pay for them in installments, but they've come under fire for appearing to encourage bad spending habits. Late fees paid on missed payments, for example, account for 24% of Afterpay's revenue.
How to Deal With Bad Credit
First and foremost, request a copy of your credit report to discover what it has to say about you. Request that any inaccuracies be addressed, and then get to work on improving your credit. You can accomplish this by:
- Making on-time payments on all of your debts, including your mortgage, auto loan, personal loan, and credit card
- If you're having trouble making payments, talk to your creditors about working out a payment plan.
- To discuss your alternatives, meet with a financial counselor.
- Consider a debt consolidation plan.
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Final Thoughts on Credit Cards for Bad Credit Australia Instant Approval
The low-level or non-existent credit check is a typical feature of guaranteed or fast approval cards. Credit card issuers, on the other hand, value applicants with a good credit score because past credit behavior is one of the best predictors of future credit usage.
Because defaulted debts and the costs of pursuing these defaults are one of the major expenses for credit card companies, restricting the number of people who use their cards with a bad credit history is an effective strategy to limit their losses and hence keep interest rates low. As a result, a potential applicant should think about whether or not he or she actually wants a card that doesn't require a credit check.
It's not the end of the world if you have bad credit. Instant Approval Credit Cards can help you restore your credit and are a good option if you're having trouble getting approved for a credit card. This is helpful for applicants because of the fast application process and immediate response time. With so many choices, you should be able to determine one that matches your expectations perfectly.