If you’re ‘swipe happy’ when it comes to your credit card, but lag at making repayments on time, you could be racking up hundreds in unnecessary fees each year. Suddenly, those ‘bargain buys’ you buy on a whim may actually cost a small fortune.
Credit card comparison website
creditcardcompare.com.au reveals one in two credit cards now charge cardholders $20-40 each time they fail to pay on time. If these fees appear on your statement, you’re not alone.
Australia’s credit card debt is creeping upwards to a startling $51.5 billion, showing many of us are relying on our cards for purchases but may not be as willing to pay back the debt. There are ways you can get back on track, and the good news is it might not take a lot of hard work.
David Boyd, co-founder of creditcardcompare.com.au, has compiled five common mistakes made by shoppers with their cards and how they can take matters back into their own hands.
1. Start With The Right Card
If your bill paying is as far from organised as your new-season wardrobe, high interest rates will have you feeling the heat. “If you’re sitting with an interest rate of around 20 per cent, look into switching to a balance transfer card with a low introductory interest rate to help clear any debt that you’ve racked up,” David says.
2. Review Your Statement
Remember that subscription you cancelled? Or the ill-fitting dress you returned? The only way of guaranteeing your statement is correct is by reviewing it in detail each month. “Mistakes happen and unauthorised transactions can slip through the net. Flag anything out of the ordinary with your bank immediately,” David says.
3. Don't Leave Payment To The Final Hour
“If running late for everything is your specialty, set yourself a reminder on your phone to pay your credit card bill three days in advance of the due date, especially if your card is issued by a bank different to your transaction account. Your payment could take more than 24 hours to be received and even a missed payment of one day can incur a late fee.”
4. Pay More Than The Minimum
If the primary, long-term relationship in your life is with credit card debt, you need to reconsider how much you’re paying each month. “If you’re paying a minimum of $100 per month on a $5,000 credit card balance, it could take you about nine years to knock the debt over. Increase your repayments until you’re out of the rut.”
5. Don't Dismiss Early Warning Signs
“Don’t bury your head in the sand when it comes to your debt. Missing repayments might not seem like a big deal, but it could impact your credit history. If you’re bad at paying on time, avoid trying to increase limits on your card. If you’re worried about your credit worthiness, get a free copy of your credit report and create a plan to get yourself back on track.”
