In Australia credit cards can generally be split into two different types. They are those offering interest free days or no interest free days.

Interest free days

This type of card usually has a higher interest rate, annual fee and often offers a reward program. To ensure you don't pay any interest, you have to pay the outstanding balance off in full by the due date.

The key here is to ask yourself. Am I the type that would pay off the credit card in full every month? If so this type of card may be for you.

Also consider whether this option is still reasonable when taking into account, the annual fee and the benefit of having a rewards program. If you are not disciplined then it will cost you a higher interest rate and annual fee, not to mention the excuse that it okay to spend more as you'll get more rewards points!

Remember the Banks wouldn't be offering these programs and enticing you to increase your limit if they weren't making money out of it. It's not hard to work out whose money it is they are making their profits from!  

No interest free days

This type of card usually has a lower interest rate, no annual fee, minimal features and no rewards program. They are a straight forward card. You pay for what you get.

These cards are for those who don't pay their credit card off in full each month or for those who rarely use the card at all.

It is important to have the lowest rate you can get combined with convenience. 

Prepaid Credit Cards

Prepaid credit cards are not that popular at present but are being issued in greater numbers. Because it is your money being used there is no application criteria to meet. This combined with no interest payable or annual fees and the card on face value looks to be a winner. You may be asking what is in it for the Card Issuer if they don't charge any interest or annual fee? There is an upfront fee of around $5 for the card itself which is reasonable. Where the card issuer earns money is the charges if you have to speak to one of their staff on the phone. To enquire about your balance or change your address could cost you around $5!

At this stage the prepaid credit cards are not that flexible and some don't allow withdrawls from an ATM. I'm sure the features will improve but one thing won't change. The card issuer isn't a charity and therefore will be looking to make money some how. Before you agree to take up one of these cards find out what charges apply and how can you transfer money into the card and out of it.

Cash back cards

This is a new trend that is set up on you receiving a cash back offer,  based on a percentage of all purchases. This percentage is likely to be small say 1% and have a cap on it. It is really a bit of a gimmick. After all you need to spend $1.00 to get 1c back. Why are they promoting it? Because it obviously works. In the United States about 70% of credit cards have this feature. It encourages you to spend more on your card. The banks want you to spend more because then there is less likelihood of you paying off your card, which means greater profits for them!