Ways to Use your Credit Card Responsibly

A credit card, a.k.a. plastic money, can be a valuable tool for payments. Cards have become increasingly popular as an alternative to actual cash because of the convenience it offers. However, this usually comes at a cost. You can avoid huge interest and fees by knowing ways to use your credit card responsibly.

Stay in control

It’s important to stay in control when using your card because otherwise and before you know it, you may end up collecting more debt on your card than you can afford to pay. One of the better ways to do that is to keep track of your spending by checking your credit card statement regularly.

Check credit card statement

Keeping your monthly credit card receipts under systematic review is the best way to check your statement. This will illustrate if what has been charged is the right amount for the things you bought, and notify you if costs were included for those you did not buy.

Look for these red flags when you check your statement: 

• unusual or large charges
• charges by companies you do not recognise
• duplicate charges
• changes in direct debit amounts
  

Contact your credit provider immediately if there are any transactions you didn’t make. They may be able to reverse the transaction.

Pay your credit card on time

When you check your credit card statement, don’t forget the due date of payment. Make sure to pay on time to avoid late payment fees or additional charges.

You can set up an automated direct debit to pay a fixed amount off the balance owing each payday. Make sure these payments cover at least the minimum monthly payment due on the card.

Repay extra or more than the minimum

You’ll pay a lot of interest if you only make the minimum repayments on your card, which could take years to pay off your debt.

Pay off more when you can. Switch to a card with a lower interest rate if you’re struggling to pay more than the minimum. Make sure to close the card after repayment to avoid more debt.

Set or reduce your credit limit

The credit limit you set should be an amount you can afford, one that won’t tempt you to spend more than you should. So, ask your credit provider to reduce your credit limit. You can call, visit a branch, or do it yourself online.

Don’t use credit when you run low on cash often

If you’re running low on cash frequently, using credit won’t work in the long run. You might get through the immediate crisis, but over time, end up with even more debt.

If you liked our “Ways to Use your Credit Card Responsibly” and find it useful, check our blogs regularly for more information on how to get out of debt and get updates on apps to help finances in Australia