Credit card rates and fees are very difficult to understand. It is because the credit card companies do not want you to know the numbers well. Many Australians either overuse or fall for the wrong card and end up owing huge money as fees. When defaulted, it would heavily affect the credit score.
According to the RBA report of February, Australia owes about 50 billion dollars for their credit cards and out of which 35 billion dollars consists of accruing interest. There are a lot of credit cards in the market with varying benefits and long tenure of interest free periods. It is important to analyse the best card and opt for it.
The best way is to give your credit card statement a good look. Learn about the credit limits and check how much you are using it. Unwanted increase in credit limit would increase the credit charges.
Keeping track of the spending, the fee and other costs associated with the credit card would help you keep a control over your spending and also help to analyse whether it is time to change the card. Credit card loyalty would not help you much, when it comes to interest rates. It is better to shift to cards which has interest free period.
Using credit card makes life and financial situation much easier. All you need is to remember these three points while using your credit cards.
a) Always pay your bill in full. If you have accumulated a large amount of money as debt, it is better to shift to an interest free new card and make use of the interest free period to settle the debt. Shifting credit cards very often will also affect your credit score. If you are paying in full, you would never need to pay the interest and also have a good credit history.
b) Use the credit card to pay your bills. This would help you to pay the utility bills on time and also avail rewards.
c) Find the best card to use. Compare the annual fee, reward points, insurances and also about other facilities of the card before you pick a new one. Do not use more than one card at a time. You can increase your credit limit if required. You should not use one credit card to pay off another. This would pull you much deeper into the debts.
Tammy Richards is a seasoned finance writer with over 15 years of experience in the industry. With a keen eye for detail and a passion for helping people make smart money decisions, Tammy has become a trusted voice in the world of personal finance. Holding an MBA and drawing from her extensive entrepreneurial background, she offers valuable insights and practical advice to her readers.
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