How do credit cards work?

We’ve broken down the basics — from what a credit card is to repayments and statements — so you can figure out if a credit card is right for you.

6 minute read

What’s a credit card?

In bankspeak, it’s called a ‘revolving line of credit’. This just means it’s a card with a set amount of funds (we call that a ‘credit limit’) that you borrow from a bank and can use anytime.

When you use your card to make a purchase, you then need to pay it back. You’ll be charged interest on the amounts you don’t pay back each month, there’s a minimum monthly repayment to avoid a late fee, and some cards will have an annual fee.

Before you apply for a credit card, make sure you’re comfortable making your repayments.

Credit card repayments

How do they work?

We’ll send you a statement each month showing the amount you've spent and any fees or charges accrued that month. It’ll also show your minimum payment amount, amount due immediately (if any) and due date.

You can either:

  • Pay your entire closing balance. This means you avoid any purchase interest and payment fees, and you’ll keep any interest free periods.
  • Pay your minimum payment amount and any amount due immediately so you're not charged a late payment fee
  • Pay something in between. If you pay anything less than your closing balance, purchase interest will be charged on the remaining balance (minus any balance transfers, promotional offers or Easy Instalments) and you’ll lose any interest free periods.

If you can, aim to pay off your entire balance to avoid having to pay interest on your purchases.

Ways to make your repayments

  • In the Bankwest App: go to ‘Accounts’, choose your credit card account and tap ‘Manage’, then tap ‘Pay’ next to 'Statement balance'.
  • In online banking: go to ‘Payments & transfers’ > 'Make a payment', then click ‘Internal Transfers’ to transfer the desired amount from one of your Bankwest accounts to your credit card account.
  • Over the phone: give us a call on 13 17 19 and select the ‘self-service phone banking’ option. Make sure you’ve got your statement and your account details handy.
  • In person: pop into your nearest branch with your statement and we’ll help you out.
  • Using BPAY®: make a BPAY payment using the payment details on your credit card statement
  • Bank@Post: Payments can be made by cash or cheque at your local participating Post Office. Find the closest Bank@Post location to you on the Bank@Post website. 1 Bank@Post is an agency service provided by Australia Post on behalf of Bankwest. Bank@Post is available at participating Post Offices. Services available are cash withdrawals, deposits, balance enquiries and credit card repayments. Limits apply.

Tips for making your repayments on time

  • Consider setting up a direct debit at least for your minimum repayment amount each month so you're covered in case you forget – that way you get to avoid late fees. Start by completing a direct debit request form.
  • Schedule a repeating payment for a fixed amount and date in the Bankwest App or online banking.
  • If you set up Easy Alerts, you can opt to get a push notification when your minimum repayment is due. Simply log in to the Bankwest App, go to 'More' > 'Notifications' > 'Settings' and switch on Easy Alerts. You'll be able to choose which notifications you want to receive.
  • Set up payment reminders and we'll send you an email to let you know when a new Statement is available.

Credit card fees

You’ll find the full list of fees you might be charged in the T&Cs, but here’s some of the more common ones.

Annual fee

Most cards will have an annual fee. As a general rule, the more features a card has – like rewards programs, complimentary insurance or fee waivers – the higher the annual fee will be.

Late payment fee

If you don’t make your minimum monthly payment on time, you’ll be charged a late fee. If your statement refers to an “Amount Due Immediately” you must also pay that amount by the due date, in order to avoid the fee.

Cash advance fee

If you withdraw cash from your credit card at an ATM or a branch, or if you use your credit card to buy cash equivalent items like travellers cheques, it’s called a cash advance. You’ll be charged interest (cash advance rate) and a fee (cash advance fee) when you make one.

Choosing the right credit card

Consider the different features on offer, how you’re planning to use the card and how you might make repayments to see which one best suits your needs.

Low rate credit card

If you don't think you'll pay off your full balance each month, you may want to choose a low-rate credit card so you pay less interest on the amount remaining. Low-rate cards are also great for bigger one-off purchases rather than everyday spending.

Low fee credit card

Picking a card without an annual fee could save you hundreds of dollars.

Low fee cards usually have higher interest rates, but if you pay off the balance every month you can avoid paying interest on your purchases.

Rewards credit card

Shop around for a rewards card that suits your limits and spending habits to earn rewards points on your eligible purchases. Our More Rewards credit cards allows you to redeem points for cash or gift vouchers. If you're a Qantas frequent flyer, consider a Quantas credit card. Keep in mind these cards usually have higher interest rates.

No foreign transaction fees credit card

Our Platinum and World credit cards have no foreign transaction fees. These will waive the charge for international online purchases or transactions you make when overseas. They also include perks like free travel insurance and worldwide card replacement.

Frequently asked questions

The purchase rate is the rate charged on items you buy with your credit card, applied at the end of your billing cycle.

A balance transfer is when you transfer the balance you owe on a credit card with a different provider over to Bankwest. This new credit card is your balance transfer credit card. The interest charged when you transfer your balance is called balance transfer interest. You can request for us to transfer your credit card balance from another bank to Bankwest any time. If you do this while applying for a Bankwest credit card, your balance will move across when you activate your new card. Terms and conditions apply. Learn more.

Yes. You can do this when you apply, or add a cardholder to an existing credit card by completing, signing and returning this form to us: Additional Cardholder(s) Request Form (PDF).

You may be able to withdraw cash from your credit card at an ATM — this is called a cash advance. But keep in mind cash advances come with a few fees:

  • Cash advance interest charges: the interest you pay on cash withdrawn from an ATM is higher than if you were to use your credit card to make a purchase. Cash advance interest will accrue daily from the day the money is withdrawn.
  • Cash advance fee: 3% of transaction amount or $4 (whichever is greater)
  • ATM fees: if you withdraw from a privately owned ATM, you may incur an ATM fee from the operator. We’ll also charge $0 ATM fees anywhere in the world, though some overseas non-bank ATM operators may charge a fee.

About this article

We take care of all the BS (bank stuff) so you can access the knowledge you need to make informed decisions. When we write a guide or article, we take steps to make sure the information is relevant, accurate and most of all, helpful.

Keep reading

Find out more about how balance transfer offers work and what to consider.

If you're eligible, apply for a card online, over the phone or in a branch.

  1. Bank@Post is an agency service provided by Australia Post on behalf of Bankwest. Bank@Post is available at participating Post Offices. Services available are cash withdrawals, deposits, balance enquiries and credit card repayments. Limits apply.

The information contained in this article is of a general nature and is not intended to be nor should it be considered as professional advice. You should not act on the basis of anything contained in this article without first obtaining specific professional advice. Also to the extent permitted by law, Bankwest, a division of Commonwealth Bank of Australia ABN 48 123 123 124 AFSL / Australian credit licence 234945, its related bodies corporate, employees and contractors accept no liability or responsibility to any persons for any loss which may be incurred or suffered as a result of acting on or refraining from acting as a result of anything contained in this article.