Organizing Your Credit Cards – Do’s and Don’ts.

Most of us use credit cards extensively month to month and almost as many people don’t use them to their full advantage and end up paying way more interest than they should. Here are some credit card tips on how to keep on top of your credit cards and get the benefits you’re entitled to.

Credit Card Do’s

Pay off your credit card in Full
It goes without saying that everyone should make their credit card payments by the due date and in full, if possible, to avoid paying any interest.

Always pay At Least the Minimum Amount
If you don’t you’ll be charged non-payment fees as well as interest. If you always only pay the minimum amount however, it’s a sure sign that you are living beyond your means and that perhaps you need to re-assess your spending habits. The interest charged on your credit card will really add up over time.

Pay your credit card automatically
Organize to pay monthly without having to think about it. Arrange this with your bank if your cash flow permits, so you never miss a payment. Make sure you have enough funds to cover the payments though, or you’ll be charged late fees and interest.

Check your statements
Make sure all purchases are in fact yours and that you’re not paying for someone else’s purchases! It’s more common than you think.

Tick, Tick, Tick
Keep all of your receipts together and tick them off your credit card statements each month then file or throw away (depending on whether or not you may need them for product returns or tax purposes).

Make notes on your statements
Write short descriptions of your purchases on your credit card statements and highlight items for tax. Don’t leave this too long – it’s too hard to remember later.

Make the most of your interest-free period
Many credit cards offer an interest-free period, often up to 55 days. If your statement period runs from say 1 November to 30 November, you will receive more interest-free days if you purchase goods early in the month, whereas fewer interest-free days will be left if you make your purchase at the end of the month. Just make sure you pay off the closing balance on your card in full by the due date to get the benefit.

Try a low limit
Consider reducing the limit on your credit card if you don’t need it. Not only will it take away the temptation but it will improve your financial position in the eyes of your bank if you go for say, a home loan.

Don’t bury you head in the sand
Talk to your bank or financial institution if you are having trouble paying off your credit card to see whether you can organize a payment schedule that works for you.

Choose a card to suit your spending habits
Choose a credit card that is right for you. If you plan to pay off your balance each month, you may not be concerned about interest rates. Therefore you might want to concentrate on things like fees, and rewards programs. If you don't think you'll pay off your card in full every month, you will probably be more interested in a card with an attractive rate of interest.

Load Up
Pay for as many expenses as you can through your credit card (including big ticket items if your limit allows) to build up Reward Program points - but only if you can pay the whole balance off in full each and every month.

Shop Around
There are many different types of credit cards available from banks and other financial institutions, so shop around. When visiting credit card providers and asking about the cards they offer, asking the following questions to help you weigh up the pros and cons of each card:

• What is the interest rate?
• Is there an interest-free period and if so, how long is it?
• Is interest charged from the date I make the purchase or from when the statement is issued?
• How much of the balance do I have to pay back by the due date?
• Is there a reward scheme, and if so, what rewards are offered and what is the cost of the rewards program?
• What are all of the fees and charges associated with this credit card?
• If I have any other accounts with this bank, do I get any rebates on my credit card?
• How widely is the card accepted (i.e. within Australia and also around the world)?
• What charges will I incur using the card overseas and what exchange rate will be used?
• Does the card offer any other benefits?
• Can I have additional cards on the account? What fees would be charged for this?
• Do I have any protection if goods or services I've paid for using this card are defective?

Credit Card Don’ts

Don’t go over your limit
You will be hit with large fees for this as soon as you do.
Don’t have too many credit cards
Reduce the number of credit cards you have to reduce the amount you pay in annual fees and the amount of time you have to spend managing them.

Don’t accept offers to increase your limit
If you don’t really need the extra credit, say thanks but no thanks. Be honest with yourself - could you really resist spending extra?

Don’t keep using a credit card if you can’t resist spending

If you know you can’t afford to buy anything on credit card and if for example, you have a shopping addiction, do yourself and your family a favour and cut your credit card up! It’s not worth the emotional and financial stress.

Don’t use Cash Advances!

Most banks will charge a fee for a cash advance, as well as charge interest from the day you get the cash i.e. there is no interest free period like there is for normal purchases.

Don't use your credit card for long-term borrowing
Credit cards are not a cost effective way of funding long-term borrowing. If you have a few debts such as credit cards, leases, car loans and a housing loan, speak to your bank about consolidating your debts under one umbrella credit product. This way, instead of paying a higher rate of interest on your credit card, you will pay interest at home loan rates, which are usually much lower.

Don’t be sucked in by Rewards
If you don’t think you’ll be able to pay off a credit card every month in full don’t sign up. The interest you will pay will more than likely outweigh any rewards you may get.