Managing Your Credit Cards


Credit cards can be handy but they can also get us in a lot of trouble. According to the Reserve Bank of Australia, our nation holds a total of $50 billion in credit card debt alone and it’s a major cause of bankruptcy for individuals. This is why it’s important for us to manage our credit cards wisely. Here are 7 handy hints on how you can do it!

1. If you can’t afford it don’t buy it

Only charge items to your card or withdraw cash if you know you can afford to pay off your balance within a realistic time frame, and be aware that most credit cards charge additional fees and higher interest for late payments.


2. Avoid paying unnecessary fees

Most banks charge an annual fee for their credit cards, so it’s worth limiting the number of credit cards you have. Fewer cards mean fewer annual fees and fewer interest rates to keep track of.

Make monthly repayments on time and don’t exceed your credit limit, to avoid additional fees. Types of fees that may be charged are late payment and overlimit fees. Talk to your bank or financial institution for more information on these types of fees.


3. Avoid interest payments altogether

If you have a credit card that offers interest free days, you can avoid paying interest on your purchases if you always pay off the closing balance on your card in full, by the due date on your statement.


4. Minimise interest charges

Always pay at least the minimum repayment by the due date. Better still, if possible, pay more than the minimum. The more you pay, the faster you can reduce your credit card debt and the less interest you will pay.


5. Manage your debt sensibly

Talk to your bank or financial institution if you get into trouble paying off your credit card and see whether you can organise a payment schedule that works for you.


6. Don’t use your credit card for long-term borrowing

Many people have multiple debts such as credit card, hire purchase, car loan and housing loan. If this is the case, you may be paying more interest than you need to. Credit cards are not a cost effective way of funding long term borrowing. Speak to your lender about consolidating your debts under one umbrella credit product like your housing loan. So, instead of paying a higher rate of interest on your credit card, you’ll pay at the home loan rate which is often much lower. Then you can put the savings directly into your home loan!


7. Make the most of your interest-free period

Many credit cards offer an interest-free period. The number of interest-free days in this period varies from card to card, but can be up to 44 or even 55 days. If your statement period runs from 1 January to 31 January, you will receive more interest-free days if you purchase goods early in the month, whereas fewer interest-free days will be left if you make your purchase at the end of the month as it is.

by Donna McKeowen

Donna has over 17 years experiance in the financial industry and is practised in all facets of financial planning, including retirement, wealth creation, gearing, superannuation and risk insurance.


The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.