Helpful hints - Credit tips
- Before you make a purchase using credit, think about whether you can really afford – and need, the item. Or try saving for it. Saving may take longer, but paying in cash could see you getting a better deal.
- Choose a credit card that matches your spending and repayments pattern. If you are likely to carry a debt from one statement to the next, opt for a card with a lower interest rate and ‘no interest free’ period rather than a higher rate card with interest-free days.
- Some cards will waive the annual fee if you spend over a certain limit on the card each year. This can save you money, but don’t let it tempt you into putting more on your card than you normally would.
- Store cards provided by major retailers offer savings through cardholder discounts and other benefits like extended warranties. The interest rates are often higher than for normal credit cards though, so use them carefully and don’t let them shape your shopping habits.
- Take advantage of the low introductory rates offered by many card issuers on balance transfers. Swapping a $2,000 balance on a card with a rate of 18% pa to a new card with a 12-month introductory rate of, say, 6%, could see you save $240 in interest for the first year. Be aware though that the lower rate generally only applies to balance transfers. The rate for new purchases may be far higher.
- Don’t regard the minimum repayment on your credit card as the only amount you can pay. . Paying more than the minimum each month can see you make substantial savings on your card’s interest charge.
- If you pay the card balance in full each month, you pay no interest, potentially making your credit card a cheap and effective means of credit. Before you pay to join a credit card reward program make sure it offers value for money. On a frequent flyer program for example, you may get a better deal by purchasing a discount airfare ticket once you’ve taken card fees and charges into account.
- Think about getting a combined debit and credit card that links to your savings account while providing access to credit. Use the debit card for everyday purchases and save the credit for larger or irregular purchases.
- Credit cards are convenient for shopping over the internet, saving you time and money. Be sure to shop at secure sites though and always keep a record of the transaction.
- Use your credit card to save on bank fees. If you are disciplined about repaying the card balance, consider using the card to make all your purchases instead of making frequent cash withdrawals from an ATM. Then, repay the card in full each month.
- Credit card reward programs may come at the price of a higher interest rate. Don’t shop somewhere just because it adds to your points tally.
- Store cards may be easier to access – especially if you have no previous credit history. But the interest are often much higher than on standard credit cards, which can make them unsuitable for newcomers to credit.
- Cancelling your credit card? Don’t just cut the card up – let your card issuer know you’d like to cancel the card, otherwise you could still be charged annual card fees. There is usually a phone number on the card that lets you contact the card provider.
- Be aware of your credit card repayment dates as a late payment can prove to be expensive.
- Store cards provided by major retailers offer savings through cardholder discounts and other benefits like extended warranties. The interest rates are often higher than for normal credit cards though, so use them carefully and don’t let them change your shopping habits.
- The primary cardholder is responsible for any debts racked up on a subsidiary credit card. If you believe the subsidiary card is being abused arrange to have it cancelled.
- Most thieves use stolen credit cards within 48 hours, so it’s important to call your credit provider as soon as you realise that any of your cards are lost or stolen.
- Always compare your credit card receipts to your monthly statements. Report errors immediately or you may be liable for the disputed amount.
- On cards with a low credit limit, a high annual fee can really boost the overall cost. For example, on a credit card with a limit of $1,000, an annual fee of $30 is the equivalent of an extra 3% in interest.
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