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Financial Planning

Smart ways to use your credit card

Credit cards are a convenient way to pay for the things you want, but this convenience can come at a cost.  Avoid costly fees and interest by following our tips.

  1. Keep track of your spending

It can be very easy to rack up more debt on your card than you can afford to repay, so it’s important to stay in control. The best way to do this is to keep track of your spending. Make sure you regularly check your credit card statement.

  1. Pay your credit card on time

When you get your credit card statement, check the date the payment is due, and make sure you pay on time. This will help you avoid extra interest charges or hefty late payment fees. To make it easier to pay on time, consider setting up a direct debit to pay a fixed amount off the balance owing each payday. Just make sure these payments cover at least the minimum monthly payment due on the card.

  1. Maximise your credit card repayments

If you only make the minimum repayments on your card each month, you’ll pay a lot of interest and it could take years to pay off your credit card debt. If you’re struggling to pay more than the minimum monthly repayment, consider switching to a card with a lower interest rate, and pay off more when you can.

  1. Set a sensible credit limit

Your credit limit should be an amount you know you can repay, and one that won’t tempt you to spend more than you can afford.

Reducing your credit limit

If you want to avoid the temptation to overspend on your card, ask your credit provider to reduce your credit limit. You can do this by phone or by visiting a branch. In most cases, your account will be updated within 1-2 business days.

Invitations to increase your credit limit

Credit card issuers are not allowed to send you invitations to increase your credit limit without first getting your agreement. This applies to both new and existing credit cards. You can ask your card issuer for an increase to your credit limit at any time, even if you decide to opt out of receiving offers of more credit.

If you need to increase the limit to make a special purchase, aim to pay the debt down quickly, then lower your limit back to a more manageable amount.

  1. Don’t use credit to make ends meet

If an unexpected emergency happens, or if you’re just running low on cash before payday, using credit or taking a cash advance is not going to work for you in the long run. It might get you through the immediate crisis but, over time, you’ll end up even more debt.

  1. Use store cards wisely

It can be tempting to get a store card if you shop regularly at a particular retailer. Purchases paid for with these cards might earn rewards points or give you access to discounts or other exclusive offers. But think twice before you sign up for store cards, as there are often fees attached (like annual and service fees), and the interest rate might be higher than other cards.

Check the terms and conditions carefully to make sure any potential savings you might earn won’t be eaten away by fees and charges.

  1. Check your credit card statement

The best way to check your monthly statement is to keep all of your credit card receipts each month, then tick them off against the charges on your statement. This will help you check that you have been charged the right amount for the things you bought, and that you have not been charged for anything you did not buy.

Even if you don’t keep your receipts, here are some things you should look for when checking your credit card statement:

If there are any transactions you didn’t make, contact your credit card provider immediately, as they may be able to reverse the transaction. See unauthorised and mistaken transactions for more details.

Take charge of your credit card and make sure you only pay for expenses you have authorised.

Source: ASIC Money Smart


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The information provided on this website, including the material and contents provided in the website publications, are informative in nature only and you should not act specifically on the basis of this information alone. It should not be used as a substitute for legal, business, accounting, tax, financial planning or other professional advice. If expert assistance is required, professional advice should be obtained. Liability limited by a scheme approved under Professional Standards Legislation

Paul Baggetta is the Founder & Principal of Baggetta & Co (ABN 68 786 233 813).

Paul Baggetta has been a Taxation Accountant since 1981, a Financial Planner since 1998, and in 1993 qualified as a Real Estate Licensee, holding a Triennial Certificate (currently not trading) and operated his own Real Estate business for property investment clients for over 5 years as a second business.

Financial planning services are provided by Paul Baggetta as an Authorised Representative (No. 261469) of Capstone Financial Planning Pty Ltd. ABN 24 093 733 969. Australian Financial Services License No. 223135.


Taxation & Accounting services are provided by Paul Baggetta as a Registered Tax Agent (No.61487008) and is a Member of SMSF Association, FIPA & NTAA.