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Things to Avoid Charging to Your Credit Card

JE Cornett — Thu, 08 Mar 2012 21:57:36 +0000

The ease of using a credit card makes it tempting to swipe plastic for even the most trivial expenses. However, unless your bank balance is growing at the same rate you’re charging purchases on your card, you may be in for a rude awakening when your credit card bill arrives.

While there are plenty of perfectly good reasons to use a credit card — travel, emergencies, rental cars — there are times when you may have other lower-interest options to choose from.

Student Costs

One of the rites of passage when going to uni is getting a credit card. But if you’re using your credit card to charge your educational expenses, such as tuition, fees, books and other school-related costs, you could be setting yourself up for debt trouble before you even graduate. It doesn’t take long for the costs associated with attending university to reach the five-digit range, or even higher.

If you’re having trouble meeting your financial obligations for university, consider taking out a student loan to pay the costs of uni. The interest rates are lower than those associated with credit card bills, and the monthly payments are lower, as well. Better still, you won’t be required to repay most student loans until after you’ve graduated, which gives you time to establish a career before you start paying back your loan.

Wedding Costs

The wedding industry is growing by leaps and bounds, with even many of the more conservative brides and grooms spending thousands of dollars on their nuptials. If you can afford it, that’s great, but if you plan to pay for your big fat expensive wedding by putting it on plastic, it’s time to rethink your idea of the perfect wedding.

Going into serious debt for a wedding can not only destroy your finances and your credit, it can also destroy your new marriage. Adjusting to married life is difficult enough without adding crushing debt to the list of changes you’ll be required to adjust to. If paying outright for the wedding of your dreams is out of the question, consider scaling your wedding back, or delaying the date until you’ve saved up enough to pay for it.

Vacation Costs

You’ve spent hours checking airfare websites, looking for the best deal. You’ve compared rental cars and hotels, trying to save money wherever possible. If you plan to charge the costs of your vacation to a credit card you cannot pay off in the short-term, then you’ve wasted your time searching for the best travel deals — the interest you’ll pay on your charges may eat up any savings you may have realized, and add back some more costs, as well.

Credit cards are often touted as the preferred method of paying for the costs associated with travel, such as airfare, rental cars, hotels and meals. However, that’s assuming that you have the ready cash to pay off your credit card in full as soon as you return from your trip. And don’t over-use the rationalisation that you’ll be earning airline miles or other credit card rewards, because unless you can repay your charges soon, those rewards are worth much less than the interest you’ll be paying.

There are times when using your credit card is the wisest course of action, but in some situations, you’re better off looking for an alternative way to pay, especially if you’ll be unable to pay your credit card off in a matter of weeks or months.

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More Myths and Misconceptions About Credit Cards

JE Cornett — Mon, 20 Feb 2012 21:44:30 +0000

As long as there’s plastic in our pockets, there will be myths and misconceptions about credit cards. From confusion about closing credit card accounts to the effect that they have on your credit, urban legends about credit cards abound. Here are a few more common myths and misconceptions:

Misconception: Pay Off Credit Card Debt By Transferring Balances

The balance transfer credit card trick may be one of the oldest in the book for paying off credit card debt, but the fact that many have tried it with success doesn’t mean that it’s the safest or best way to reduce your debt. Transferring the balance from a big credit card debt to a credit card with zero or low interest can help you make a dent in your credit card balances, but only if you read the small print and make an effort to pay the best as quickly as possible.

First, make sure that the zero or low interest rate applies to balance transfers. Advertising a low or no balance card, but only applying the low or no interest to new purchases is a tactic that credit card issuers have been employing for years. If that low interest rate does apply to balance transfers, make sure that two conditions apply after the introductory rate ends:

The interest rate should be lower than the one you’re currently paying.
You should be in a situation that allows you to pay the balance down so that it is less than 75% of your available credit on the card. Otherwise, you’ll have an almost maxed-out card as soon as the introductory rate ends, and that never looks good on your credit.

Myth: Closing Credit Card Accounts Will Help My Credit

The myth that closing credit card accounts is good for your credit is one that has persisted for years, despite the fact that the opposite is often true — closing accounts can hurt your credit score rather than help it. If you have four credit cards, two of which have a zero balance and two on which you have charged 50-75% of your available credit, closing the paid off cards automatically raises your debt to credit ratio, and therefore hurts your credit.

Closing old credit card accounts and keeping newer accounts instead may have the same effect. It’s almost always better to have several open credit card accounts than to close all but one or two. If you fear accumulating debt simply because you have the cards, then cut up the cards or put them in a safe or safe deposit box where they cannot lead you into temptation.

Misconception: Using Credit Cards is Bad for My Credit

As the recession drags on and the spectre of credit card debt looms over many, using credit cards has gotten a bad rap. Credit cards are credited as being the fast track to deep debt and poor credit, but only one of those statements is true — while using credit cards recklessly can lead to debt, using a credit card is actually good for your credit. As long as you pay as agreed, that is.

Using credit cards responsibly, which means carrying a low balance or paying your card off in full each month, paying on time as agreed, and not opening more and more credit card accounts, can actually improve your credit score more quickly than your payments on an instalment loan such as a car loan or a mortgage. It’s only when you become irresponsible with credit cards that you damage your credit.

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Master Your Health Insurance

Brian — Mon, 30 Jan 2012 22:17:58 +0000

How well are you mastering your health insurance comparison? It is possible that you are ignoring some key items that could help you save money. Follow along as we examine your health insurance from a number of perspectives.

How Well Do You Understand Your Plan?

It is surprising to see consumers set themselves up for the disappointment and expense of a denied health insurance claim. In most cases it isn’t as a result of a bad policy, a bad insurance company, or some other error – it is in lack of understanding.

One of the most important things for your relationship with your health insurance policy is knowledge. It sounds simple, yet you may think there is too much to learn. However, if you don’t, how will you know how to use your plan? Take the following examples to test your understanding of your private health fund:

What happens when you seek health care from outside your insurer’s network – what will you have to pay for a doctor, emergency room, or specialist when this occurs? Is there an easy way for you to find the closest treatment facility when you’re away from your network?
How does your plan work with regard to your children, if you have a family insurance plan? Will their coverage end when your teen gets a full-time job, reaches a certain age, or some other milestone?
Have you ever read through your whole policy? When we say this, we mean every word. Do you have questions about it that are still unanswered?

Health Insurance Improvement

Are you happy with your health insurance policy? Are there some things that you would like to change about the plan, such as lowering the premiums or adjusting the coverage? You should re-evaluate and compare health insurance policies to your needs once a while (every six months is a good rule of thumb). Take care of the many items that can be approached:

Your health insurance needs may have changed. Alternatively, there may be changes in you or your health; if you don’t inform your insurer, you could run a risk of having future claims denied.
There may be opportunities for discounts or lower premiums. Just like you should with other insurance products such as home insurance or car insurance, talk to your insurer or agent about those that may be available.
Consider other ways to save money. For instance, to battle possible increases in car insurance rates, consider paying your premiums for the next year at once. You can often avoid a service fee for such a transaction.

Master Your Health Insurance Comparison

There are so many areas in which you can progress concerning your health insurance comparison:

Increase your understanding of a policy
Save money on your health insurance
Know when it may be necessary to change your plan – which may save you money or adjust your coverage appropriately
Compare your existing policy to those from other insurers

The list could go on. However, the point is this: don’t ignore your health insurance. Few insurance products are “set and forget it” items. You have to work on it from time to time, ensuring that it fits your needs, fits your budget, and so forth.

Are you the master of your health insurance?

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Are Credit Cards Rewards Worth the Risk?

Owen — Thu, 19 Jan 2012 21:54:56 +0000

Imagine that you signed up for the latest credit card offer sent to you in the mail, wanting to take advantage of the appealing, lucrative rewards program. After all, you certainly spend enough to earn countless air miles, and a little holiday would be a nice reward indeed. But you pause just before signing on the dotted line. Is this rewards program really worth it?

Credit Card Rewards Differences

Most consumers know there are substantial differences to credit card rewards programs. There are cash-back rewards, airline miles and gift redeemable rewards programs. Each appeals to consumers in a different way.

Those who travel often will get the most bang for their buck by choosing airline miles or discount fares. Others who do not travel frequently will but rely on their credit cards for regular, everyday purchases will get the most out of cash-back rewards. Consumers who use their credit card sparingly might find gift rewards the best fit. The point is that your lifestyle and spending habits should dictate your choice of credit card reward program, if you choose to use one at all.

The Truth about Credit Card Reward Programs

As with any enticement offered by banks and credit unions, there’s a reason credit card issuers dish out these rewards programs. It’s not just because of their good nature or to spread goodwill among mankind, it is yet another tactic for separating consumers from their money.

Banks and credit unions offering credit cards with rewards are counting on the likelihood that some consumers will overspend to reach their goal of earning those rewards. They are making a calculated bet that consumers will spend more to get more rewards. And that isn’t a good financial strategy for consumers!

The Rewards Game

Sure, spending money to get money back doesn’t sound like a bad idea. It’s almost like paying less for the same item. But those purchases may not equate to eternal rewards as and when you want them. Consumers should read the fine print. That’s where expiration limits and other important conditions are to be found.

Not only do the points eventually expire, making redemption impossible on outdated reward points, but what about other expenses? Even if a consumer spends enough to get a free round trip airline ticket , what about their accommodations or travel insurance? Will those same reward points put extra cash in your pocket to spend while on holiday? Then there’s the cost of meals and car rental – the list goes on. What seems like a good deal might not come to fruition when all the extras are tallied-up.

Cash back rewards may likewise be less of a great deal that they seem at face value. The amount a consumer gets back may be dwarfed by the related credit card interest payments.

Do your research and choose wisely; you could use an online comparison tool to determine which rewards program is the best fit for you personally. You might find several or just a few. If you decide to apply for a reward credit card, be sure not to base your decision solely on the rewards but also on interest rates and fees.

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4 Recession Lessons We Shouldn’t Forget

Sabrina — Sun, 16 Oct 2011 12:52:40 +0000

The world is emerging slowly from the recession with a tentative, collective sigh of relief. Unemployment is improving and the economy is inching back to more normal levels. Of course, ‘normal’ has a different meaning now. We’re not going immediately back to the booming economy we had. But a slow and steady improvement is quite satisfying to most of us at this point.

In any disaster, though, there are lessons to be learned, about ourselves as people and about the way we choose to live our lives. Here are some trends from the recession that we shouldn’t leave behind as our fortunes improve.

Money Consciousness

During the recession, the whole world became more conscious of how much money we were spending and what we were spending it on. And as our prosperity returns, it is going to be very tempting to also return to looser spending habits. The problem is, that’s the sort of behavior that landed people in financial trouble in the first place.

So when we get jobs or raises we’ve been waiting for, our discipline must remain. Put money away in savings, since experts say you should have at least six months’ worth of living expenses socked away; or maybe you put your dollars in a solid retirement account. Whatever you do, don’t waste your extra dollars when they start coming in!

Compassion

During the depths of the recession, plenty of people complained about not getting a job that related to their field, not getting a job at all, or not getting a long-awaited raise or bonus. But most of the time, we then modified our complaint: “But at least I still have my home.” Or “But at least I still have a job.” And many of us translated that sentiment into action by being good neighbors.

We donated money, time and skill to friends and family who were worse off financially than we were. We opened our homes to one another, taking in those who suddenly could not pay their bills. That kind of love and compassion is something the world could always use more of.

Thankfulness

Seeing our family, friends and neighbors around the world falling into bad situations made many of us refocus on what we have, and simply be thankful for it. When things start to go back to ‘normal,’ it is far too easy to go back to the pursuit of material things and worldly honors. Ambition isn’t bad; but save some room in your day-to-day life for a simple acknowledgement of what you already have. You’ll be happier for it.

Frugal Living

Suddenly strapped for cash due to layoffs, pay cuts, lost investments, and the like, we all learned tricks to stretch our money further than we thought it could go. We paid more attention to our receipts and bills, making sure discounts and coupons had been included. We shopped with care, finding sales and clipping or printing coupons. We learned to make do or to refurbish what we had.

Some of us even began gardening, canning, sewing or knitting to save money. We found ways to make money with hobbies and interests. Now that these frugal habits are a part of your life, don’t let them go! They are much harder to relearn than they are to keep.

There can be no doubt that the recession has changed the world. The question that remains is this: will it be for better or for worse? Will we let fear, distrust and anger take over, leading us on a dark financial path? Or will we learn our lessons well and come out of the danger with greater strength and greater wisdom? Only time will tell, but I, for one, am very optimistic.

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6 smart ways to use your credit card

Emmie — Tue, 11 Oct 2011 17:28:23 +0000

It goes without saying that credit cards are a double-edged sword. The convenience a credit card offers can lead to impulsive spending, which in turn results in escalating debts. On the other hand, using credit cards wisely can deliver numerous benefits. The key is to make informed choices on using your credit cards to your advantage, and not be the victim of reckless spending.

Here are 6 proven smart credit card strategies:

1. Borrow cheaply

Take advantage of introductory low-rate offers, such as 0% interest for six months or 0% financing for one full year, with a major purchase. Smart consumers take advantage of these offers for many reasons – to consolidate debt, pay tertiary education fees or to fund home renovation projects.

2. Accumulate rewards

Most credit cards offer subscribers rewards using the accumulated points approach. If you use your reward credit card to purchase items that you need, you can earn a wide selection of rewards that suit all tastes such as travel rewards, shopping and restaurant vouchers, and free movie passes. However, keep an eye out for “strings attached” in the form of limited travel dates, limits on the amounts you can earn, and minimum purchase requirements.

3. Only spend available money

We should always be reminded that credit cards do not represent extra cash. In fact, they should be deemed as substitutes for cash. Credit cards represent convenience without having to carry cash around, enabling us to purchase necessary items at just a swipe of the plastic. Ensure that you already have money in your account to pay off your purchase when your monthly statement arrives in your mail. Missing the payment deadline will cost you more money as you have to pay the late payment fee. Furthermore, carrying a balance on your account will result in your having to pay interest on it.

4. Keep an eye on fees

While the a rewards credit card may be worth the annual fee, most cards with yearly fees aren’t worth it at all. Be aware of other fees charged on your credit card, too, such as foreign transaction fees, late payment and over the limit fees.

5. Set up automatic payments

If you have the habit of not paying off your balance on time, it is wise to sign up for automatic payments through your bank. This method also works well with those who are managing various kinds of loans, such as car loans and mortgages.

6. Avoid cash withdrawals

Some banks charge for cash withdrawals via the automatic teller machine (ATM). If you need to make a withdrawal, take out the sum of cash that you have budgeted for the whole month in a once-per-month withdrawal. This way, you save the unnecessary multiple fees that will be charged to you each time you use the ATM.

Credit cards are a boon if used responsibly on selected purchases. The significant factor to note is to ensure that you maintain your credit rating by paying your balance on time and settling the full sum of the amount you owe. You’d be better off not using the credit card if you don’t have readily available cash in your account to pay off your bill. Always stick to cash for ordinary day-to-day items like toiletries, groceries, clothes and restaurant food. The bottom line is to ensure that you fully use your card to your advantage by avoiding credit card traps like making a late payment and maxing out your credit card.

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How to Avoid Identity Theft

Amanda — Thu, 06 Oct 2011 14:16:48 +0000

It’s a pretty awful situation to imagine. You log into your bank account and see all these charges you didn’t make on your credit card, withdrawals you didn’t request from your checking, and your savings completely depleted.

Identity theft is a big problem. In fact, an estimated 25% of reported frauds in Australia are a result of online identity theft. Fortunately, there are steps you can take to avoid it and ensure that your financial records stay safe.

Guard Your Financial Information

Only use your credit card or bank account information when you are actually purchasing something – not for identification, nor as a guarantee when you intend to pay in cash later.

Keep your National Identification Number safe

The last place on Earth you should keep your National Identification Number is in your wallet. In short, if your wallet gets stolen or lost you would have some serious problems on your hands, and I’m talking about more than just bank accounts.

Your National Identification Number is the key that unlocks your entire identity. If you run across companies or agencies that ask for it simply ask them to give you an alternative, such as a separate reference number. Similarly, do not ever give your National Identification Number to anyone who calls you on the phone or emails you.

Go Paperless

Your mail is a gold mine for individuals who want to steal from you. Anything from account numbers to credit card information and insurance can be taken from your mailbox by just about anybody. You can avoid this problem by requesting that all your statements, like bank accounts and retirement funds, be digital.

Many banks and brokerage firms will give you the option to go paperless when logging on to your online account.

Of course, there are certain financial documents you should have a hard copy of. If this is the case, then print the documents at home and keep them in a safe place.

Don’t Shop When Using Public Wifi

Actually, don’t do anything involving money when using public wifi. Simply put, public wifi can easily be hacked into and you never know who can see what you are doing online.

Only Use Secure Checkout Methods

Do not give any information such as account information or National Identification Numbers over the phone or via email. Also, make sure to look for clues on websites in order to ensure that they are legitimate. When giving sensitive information, the URL in your browser address bar should change from “http” to “https” or “shttp”. The website will also encrypt your passwords and other sensitive information.

You may also want to check what the website says about how they store the information, just to be on the safe side.

Check Your Credit Reports Regularly

If someone steals your identity they can destroy your financial life – starting with your credit rating. Your credit rating is linked to just about everything you do, from applying for a loan to sometimes even getting a job.

Make sure to check your credit reports regularly in order to ensure that everything is as it should be. If you see any suspicious activity contact your credit card company or bank immediately.

If you are careful enough with your information, you can significantly reduce the possibility of identity theft, thus ensuring that your finances, and your entire identity, stay safe.

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Warning Signs: Debt Consolidation Scams

Amanda — Mon, 26 Sep 2011 05:30:24 +0000

Debt consolidation is becoming a common phenomenon as more and more Australians find themselves deep in the hole. Higher cost of living, mortgage payments and even basic things like groceries are being put on plastic as salaries fail to keep up with price increases.

Australians have taken the lead when it comes to personal debt, as each Aussie owes roughly around $56,000 USD. That’s $12,000 more in personal debt than their U.S. counterparts. In total, in 2010 Aussies as a whole are looking at a debt total of about $1.2 trillion – a 71% increase since 2005.

It’s not just individual Aussies that are having a problem though – the government also seems to have maxed out its credit card. The Australian government handed out about $42 billion in stimulus packages – the highest of any developed country – which left the government at a deficit. This deficit means less cash handouts to Australians and higher interest rates on loans and credit as Aussies living beyond their means already struggle to keep a handle on their debt.

Consequently, debt consolidation is looking really good to a lot of individuals Down Under.

If you are one of those individuals who can’t seem to pay off their debt, consolidation may be a good option for you. By essentially being the middle man between individuals and creditors, consolidation could pay an instrumental role in lowering your debts so that you can pay them off faster. However, choosing a debt consolidation service may not be as easy as you think, as many have proven to be scams.

The most important thing in these cases is to choose a credible company that can find the right solution for you. If you are seriously considering consolidation, keep in mind some of the following “red flags”:

When They Promise to Pay off Your Debt in 1 or 2 Years

Due to the volatile nature of credit laws, policies and settlements, it is highly unlikely that anyone with several debts to consolidate will be able to pay them all off that quickly. A credible debt consolidation service would make you aware of that, while those that promise an easy fix are probably a scam.

When They Aren’t Registered

By law, consolidation services need to be registered with the appropriate government entities. This makes it easy to look up the company’s history and decide whether or not it’s right for you. You may come across debt consolidation companies that flaunt their many connections, but if you can’t look them up through the appropriate means, then don’t bother with them.

When They Charge a Fixed Commission

Beware of companies that charge you a fixed commission based upon the amount of debt you find yourself in. Credible companies usually only charge a part of the money they have helped to reduce.

When They Suggest Taking Out Loans

Any company that suggests taking on more debt in order to pay off your current debt is out of their minds. That’s how people end up in bankruptcy.

Debt consolidation could be a viable option for you if you find yourself in trouble. Keep a lookout for these red flags and make sure to pick the right company for you.

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Credit Counselling: What You Need to Know

Amanda — Mon, 29 Aug 2011 14:34:39 +0000

Sometimes, people are in debt so deep that they don’t know what to do. A recent article from News.com.au cited that Australians owe almost $50 million on credit cards because rising living costs are forcing them to put even small expenses on plastic, putting the average credit card holder $3321 in the hole. To make matters worse, about $36 billion is currently accruing interest.

The article also outlined the story of one Australian who was $450,000 in debt while living on a $40,000 salary. This particular person owned a grand total of ten credit cards and was using one to pay off the other. Consequently, this person went to Debt Relief Australia for some help.

This client isn’t the only one in that situation. According to Debt Relief Australia about 70,000 Australians visit their website annually.

If you find yourself in a similar situation and don’t know what to make of credit counselling, here are some basic things you should know.

What is Credit Counselling?

Credit Counselling is just one of the many ways that debt relief companies strive to help individuals get a handle on their credit under a variety of circumstances.

Credit counselling is a means of education to help individuals manage their finances, whether they are just a little behind on payments or living way beyond their means. The point is to educate and counsel you through a difficult financial time, so that you don’t make the same mistakes again

Credit counselling is suitable for a wide variety of situations, including debt management, debt elimination, debt negotiation, and debt agreements.

How Do I Know If I Need Credit Counselling?

According to Debt Relief Australia, there are some telltale signs that you may be in danger of racking up too much debt. Some of these signs include:

You sometimes put necessities like food on a credit card because you have no other means to pay.
You come too close for comfort on your credit limits.
You only pay the minimum balance on your cards each month.
You feel the only way you can manage your finances is by increasing the limit on your credit card.
You own too many credit cards to handle.
You have considered bankruptcy as a way out of your situation.
You do not know the amount you owe to creditors.

If any of the aforementioned apply to you, you may have a problem. Consequently, credit counselling strives to help you get out of some of the aforementioned situations.

How Does Credit Counselling Work?

When considering credit counselling you will most likely undergo a financial analysis. From there you will be asked a series of questions in order to pin point your exact financial situation and better serve your needs.

The kind of counselling you will receive may depend on your specific situation. For instance, credit counsellors can help you negotiate terms with creditors or even reduce your debt.

Above all, credit counsellors are trained professionals who can emotionally detach themselves from a given situation in order to assist those that are overwhelmed with their finances. If you find yourself in too deep and don’t know what to do, you should certainly consider seeking their help for your finances.

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10 Tips on Choosing the Right Credit Card

Emmie — Thu, 28 Jul 2011 17:12:48 +0000

In a cashless society, not having a credit card can put one in a disadvantaged position, especially when shopping online and taking advantage of discounts for something you really need. If you intend to apply for a credit card, do bear in mind that each one differs in terms of interest rates offered, fees, rewards and grace period on purchases.

Different companies offer different incentives and promotional rates to lure customers into signing up for their credit cards. How do you choose a card that is just right for you?

First of all, ask yourself if the card offers benefits that suit your lifestyle. Do you like to shop and eat out? Are you a frequent traveller? Is building good credit important to you? Are you conscious about how you spend your money, but need a card for certain purchases? Are cash back rewards important to you? Whatever your reason for getting a card, there should be one that works with you to meet your needs.

Use the decision factors below as a guide:

1. Decide how you’re going to use the credit card

Different credit cards offer different terms and benefits for different purposes. If you can’t pay the balance in full each month, select a card that offers a low interest rate to save on interest. On the other hand, you could look for a card that offers longer grace periods such as 55 interest-free days, to give you ample time to pay in full. If you plan to book frequent flights on your credit card, look for one that has frequent flier miles. Knowing exactly what you’re looking for will narrow the options in the selection process.

2. Credit card comparison time!

If you’re swarmed with credit card offers through internet advertisements, junk mails and brochure hand-outs, don’t be overwhelmed by them and make impulsive decisions to sign up. Compare each one to see which offers the best deal for your needs. Comparison websites such as www.creditcardoffers.com.au and www.creditcardfinder.com.au are useful resources that may assist you in finding the best deals. Such sites give you instant details on various cards at a glance.

3. Check the interest rate

Interest rate charged on outstanding balance

One of the primary factors you should consider when selecting a credit card is the interest rate. Lower interest rates mean you pay lower finance charges, the fee charged whenever you carry a balance beyond the grace period. Lower interest rates are typically given to applicants that have better credit scores. So you will qualify for this benefit if you have healthy credit ratings.

Other interest rates

Credit cards can have several interest rates – one for purchases, one for balance transfers, and one for cash advances. Interest rates for balance transfers and cash advances are usually higher, unless you’ve signed up for a promotional offer. Check for the lowest interest rates on the types of balances you plan to use.

4. Look out for annual fees.

Most credit cards charge an annual fee; it’s one of the ways banks make money from credit cards. Ideally, you’d want to completely avoid credit card fees unless the company offers other benefits you’ll take advantage of that make the fee worth it. If you can accumulate more rewards than your annual fee costs, it is then worth signing up for the card. If you don’t shop a lot and thus don’t qualify for rewards, it is best to sign up for card without an annual fee.

5. Be aware of the grace period

The grace period on a credit card is the amount of time you have to pay a balance in full to avoid a finance charge. Longer grace periods are better if you plan to pay your balance off each month, because more time is provided for you to accumulate cash to pay off your balance.

6. Rewards offers

Reward cards benefit those who do lots of shopping on necessary items such as children’s clothes, groceries for the family, or household items. Such cards either offer reward points, or give you cash back as a reward.

For example, if you use a card that offers cash back at a supermarket for your weekly grocery shopping, then you could make some savings on your shopping just by using your reward card. On the other hand, the points accumulated on a reward card can be traded for family vacations and restaurant or merchandise vouchers. In addition, other cards take a percentage off your bill balance as a cash back reward. Since these types of cards reward you for necessary purchases that you are making, you tend to gain by signing up for such cards.

7. World Traveller Benefits

If you are a frequent traveller, it is best to look for a card with the following features:

Low currency conversion rates and foreign transaction fees
This means that when you make purchases in a foreign currency using a card with low rates and fees, you won’t be charged a lot to automatically convert purchases into Australian Dollars for your bill.
Points for travel
You may consider signing up for a Frequent Flyer credit card that pays you for travel, such as offering you a mile for each dollar spent. This enables frequent flyers to accumulate credits based on the number of miles flown which can then count towards future flights, or completely pay for them.

8. Be informed about the credit limit

The credit limit is the maximum amount you can charge on your credit card without receiving a penalty. Some cards offer a $5000 credit limit, while others offer much higher limits such as $10000 or more. Exceeding your credit limit can result in a higher interest rate, since you’ve defaulted on the terms of your credit card agreement. If you need to make big item purchases, look for a credit card that has a high credit limit. One thing to note is that your credit score could be affected if your balance exceeds 10% of your credit limit.

9. Consider a balance transfer

Credit cards offering balance transfer services allow you to transfer your existing credit card debt over to a lower interest card provided by another lender. Sometimes the lender may offer an interest free period as an incentive to switch providers. The debt consolidation process onto one card could benefit anyone with outstanding balances on several credit cards. This makes it easier to keep track of monthly repayments. Moreover, you will pay less interest on your balance, at least for a certain period of time. This means that instead of paying the high interest rates, more of your monthly repayments will go to paying off the actual debt. Check the transfer fee charged by the existing lender — which can be anything up to 5% of the balance transferred — before you consider transferring your balance.

10. Pay attention to the fine print

It is a standard procedure for credit cards companies to provide you with information about their credit cards whenever they send an offer, to help you pick the best card for you. This includes:

the annual percentage rate for all types of balances
the penalty rate and the instances in which the penalty rate applies
any variable interest rate information
the grace period
the finance charge calculation method
the annual fee, if any
the minimum finance charge
fees, like cash advance fees, balance transfer fees, late payment fees, and over-the-limit fees

Credit cards can be a great personal finance tool if used wisely. It’s imperative that you choose the right card for your specific needs. In this regard, you should make sure you have the right reasons for applying before deciding on the right card. Thoroughly review the terms and conditions of credit cards you’re interested in to make sure they serve your purpose, and look at all the applicable features to help you select the right credit card that works best for you.

Image by Gabriela Camerotti