Credit Card Tips from ASIC

Here are some tips that are pretty obvious from the Australian Security and Investments Commission (ASIC). Although we know this stuff, its always good to have a quick read to make sure you remember the main point.

Credit Cards:

1. ASIC’s consumer website FIDO has released some facts & tips on how to “train” your credit card.
2. The typical credit card usually has the following characteristics:
   • A minimum monthly repayment – often as low as 2.5% of the balance
   • Any interest is charged from the date of purchase
   • Interest rates are at 16% or more per year.
3. According to FIDO, only making minimum repayments to your credit card can turn a $1000 credit card bill into an 11 year loan, and a $10,000 debt into a 27 year loan.
4. It is important to understand that your credit cards probably incur the highest interest rate of any of your debts – so you should pay this debt first, and endeavour to pay it off in full each month.
5. But since that may not be realistic come Christmas time, FIDO suggests that paying more than the minimum repayments would achieve significantly better results.|
6. For example, making monthly repayments of $50 and $500 respectively in the above two scenarios, would result in the loan being cleared within 2 years!

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