The Credit Card Handbook

Here is the credit card handbook. These are the most important yet commonly overlooked aspects of Credit Cards. I suggest you think about them everytime you pickup a credit card to purchase something.

Control your Credit Cards, don’t let them control you!

• Cash advances – beware!
  Even if you have an ‘interest-free days’ card, you pay interest immediately for cash advances. Any payments you make will not repay the cash advance until all previous credit advances have been repaid in full. You will also lose the benefit of the interest free period until you clear your account of the cash advance.
• Keep fees down
  Manage your card carefully. Try to avoid unwanted fees for exceeding your credit limit, failing to pay the minimum monthly payment on time, having a rewards program you don’t need, or allowing your payments to be dishonoured.
• Low or no fee payment methods
  Find the cheapest and easiest way to pay off your card. Phone and internet banking are almost always cheaper than paying over the counter. It may be convenient to have monthly payments deducted automatically from your account, but this is unsuitable if you want to pay off the balance owed each month.
• Leave it at home
  If you’re going out or shopping and think you might be tempted to buy something on credit, leave your cards at home.
• Keep it safe!
  Don’t let someone else get their hands on your credit card details.

Managing your Credit Cards

More than one card?

Most people only need one card. The more you have, the more fees and charges you have to pay. If you’re experiencing financial hardship, having more than one card may tempt you to use cash advances from one card to pay off another, or increase your debt further causing further financial problems.

Paying off your balance

The best policy is to pay your balance in full each month or before the end of your interest-free period. By doing this, you avoid paying interest charges on your purchases.

If you can’t manage this, clear your debt within a couple of months. If you find yourself borrowing up to your limit every time you make a payment, consider cancelling your card, and taking out a personal loan at a lower interest rate to pay off the debt. This is called ‘debt consolidation’. See the ‘Managing debt’ page for more information.

Talk to a financial counsellor if you’re having financial trouble. A financial counsellor can offer the best advice for your unique situation and help you create a realistic budget you can stick to. See our ‘Budgeting‘ page in this section for more detail.

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