1. Get the right card for you
There are hundreds of different credit cards out there, all with slightly different features. Finding the perfect card for you is about indentifying how you will use it. Is it for emergencies only? Do you plan to use it regularly and then pay the balance off in full each month? Or maybe you need the card to cover a short fall in cash, particularly during high spending times of the year, like Christmas.
If you’re planning on paying it off, go with the best rewards card. If you think you’ll need to carry over the payments for a few months, make sure you look for a card with a low interest rate.
2. Ditch your university credit card
The credit card that you signed up for when you were a university student, or fresh out of school, probably isn’t the card that you want to keep in your wallet in case of an emergency. Typically these cards charge incredibly high interest rates and offer little in terms of benefits such as points or AirMiles.
3. Get old debts under control
If you have a large outstanding balance on your credit card that you want to get under control, look into transferring the balance to a card that offers a low introductory rate on balance transfers, i.e. a 0% balance transfer card.
A few options are:
MBNA's Platinum Plus MasterCard offers 0% balance transfers for your first 15 months
The American Express Air Miles Platinum Credit Card offers a low introductory interest rate of 4.99% for balance transfers for 6 months.
Capital One offers a SmartLine Platinum MasterCard with a low long-term rate of 5.99% on purchases and balance transfers guaranteed for 3 years (as long you pay your bills on time).
4. Pay before it’s due
Always pay the balance or the interest owing a few days before it is due. That way, if the due date falls on a Sunday or holiday, you don’t have to worry about the payment clearing late and getting charged extra fees.
5. Don’t just pay the minimum
If you only pay the minimum interest owing then it could take you ages just to pay off a $500 balance and cost you loads in interest. Pay more than the minimum to decrease the balance owing quicker.
6. Make the reward points work for you
If you’re good with a budget, set aside a certain amount of cash for your purchases each month, then charge that amount on your card and pay off the full balance before the due date. Set up an automatic payment through your bank if you’re worried about forgetting. Rack up the reward points without paying any interest, then use the points for holiday travel or other purchases.
7. Avoid taking out cash on your card
Cards often charge a higher interest rate on cash advancements. If you need extra cash, look into a line of credit or a small loan through your bank instead.
Interest charged on cash advancements is typically in the area of 19-22%, but if you have a good banking history, you might be able to get a line of credit through your bank for as low Prime + 1%.
8. Eliminate unnecessary interest charges
Being lazy isn’t stupid, paying interest because you’re lazy is. If you regularly forget to pay your credit card balance each month and get stuck with painful interest charges, take a look at how online banking can help save you some stress. You can easily set up an automatic payment from your bank account to your credit card each month, so you don’t get stuck with those interest fees.
9. Look at your bill
Make sure you actually bought what you’re being charged for. Also, pay attention to any admin or extra fees such as credit card insurance. Often you get services free for the first few months and then companies charge for them. Don’t get caught paying for something you don’t use or want.
10. Ask for a lower rate
If you’ve built up a good credit history with your current card provider, there is no harm in calling the card company to ask for a lower interest rate. You may need to threaten to cancel the card before they take action, but it may be worth it to lower your interest.