Helpful hints

Ways to manage your debt

How to get the most from credit

To get the most from credit, it’s important to manage it wisely – restricting your use of credit rather than overspending, keeping track of how much you owe and maintaining a good repayment record.

Some of the ideas below will help you manage your debt:

  • Have your financial goals in mind when you use credit. Burdening yourself with large debts can make it hard to achieve your goals.
  • Use a budget. Without one, it’s easy to spend more than you earn. Include debt repayments in your budget, allowing for more than the minimum repayments. Put money aside for savings too.
  • Value your good credit bureau file. The time may come when you need to borrow money for a worthwhile purpose. A poor repayment history may mean you miss out on these opportunities.
  • Aim to pay for most things with cash. This isn’t always practical for major purchases, like a car, but if you stick to it as much as possible, it’s easier to manage your money and stay out of debt.
  • Choose the type of credit best suited to your needs. For costly items that will take time to pay off, a personal loan may be better than, say, a credit card.
  • Shop around for the best credit deal. Weigh up all the costs involved including fee and charges. Consider other factors too, including the ability to make extra repayments, which will reduce the overall interest cost.
  • Make saving a priority. Having a buffer of cash means you won’t have to use credit to cope with unexpected bills.
  • Limit yourself to one credit card. People experiencing serious debt problems often have multiple credit cards.
  • Always look for the ‘comparison’ rate when comparing loans. This rate includes ongoing fees and charges, giving you a more realistic idea of how much a loan cost and how it rates compared to other loans.
  • Debit cards give you the security and convenience of a credit card, but because the money is drawn from your bank account you won’t be charged interest.
  • Merchants can charge extra if you pay by credit card. Always enquire about this beforehand, as the additional fee can really bump up the price of a big-ticket item.
  • Be aware of your credit card repayment dates as a late payment can prove to be expensive.
  • Note sure about a purchase entry on your credit card statement? Contact your card provider’s help line. Interest charges should be suspended while an investigation is made. However, if it turns out that you did indeed make the purchase, you could be charged an investigation fee.