Managing your credit card

By You and Money

Credit cards can be a convenient way of making purchases without the hassle of carrying around lots of cash. But be warned, they can easily get out of control.

Here are a few tips to help you take control of your credit card.

  • Make payments on time – pay off your credit card by the due date if possible. If you can’t make the full repayment, pay the minimum repayment by the due date to avoid being charged late payment fees.
    • Put it in your calendar – record your credit card payment date in your Outlook or diary as a reminder to pay it. Or use internet banking to set up your payment in advance.
    • Use cash whenever possible – it’s easier to keep track of cash than credit.
    • Stick to one card – credit cards are great for emergencies and convenience but you don’t need a wallet full of them. An exception is if you’re going overseas and want the flexibility of a second card.
    • Write it down – keep track of what you buy and keep receipts so you don’t get a surprise when your credit card statement arrives.
    • Consider a balance transfer – if you can’t keep up with repayments, transfer your debt to a low interest credit card. (Think realistically – a card that offers 4%pa on a balance transfer for 12 months may be better than a 0%pa balance transfer for six months if you can’t pay off your debts within six months.)
  • Avoid ATMs – when you take money out with your credit card from an ATM, interest is charged as soon as you withdraw the money. This is called a cash advance.
  • Talk to your bank – if you’re consistently having trouble meeting your credit card repayments, talk to your bank. They may be able to restructure your debt.

Increasing your credit limit

Have you recently received an offer to increase your credit limit? It might sound good, but think carefully about if you need it and, more importantly, if you can afford the repayments.

Instances where it may be useful to increase your limit

  • if your credit card has been declined because you’ve reached your limit
  • if you use your credit card responsibly and always pay it off by the due date
  • if you plan to use your card for large expenses such as overseas airfares.

Sometimes it’s best not to increase your credit limit. For instance:

  • if you struggle to pay off your card by the due date
  • if you have other debts.

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