Common bad credit habits that need to be ditched in the new year

Posted on Tuesday, January 15, 2019 - 15:49

With the ushering in of the new year comes many promises to break bad habits and to become the master over our finances. You can add checking your credit card use to the list, especially if you keep finding yourself nearing the danger zone because of it. To make managing your finances a realistic goal. Here are some common bad credit habits that you can ditch.

Not paying your balance off in full

Credit cards can be convenient when it comes to making those important purchases. However, do not let it become the bane of your existence by not paying your credit card balance off in full. According to ASIC, 1.9% of Aussies struggle with credit card debt which has amounted to $45 billion being owed nationwide.

Not paying off your balances off in full can easily build amounts that can become harder and harder to pay off leading to a debt spiral. You can consider automating your credit card payments to ensure that they are paid off in full.

If you find yourself struggling to meet your card repayments, it is time to consider another card that will make it affordable. Remember to check the costs involved when switching cards or consolidating your debt to another card.

Only meeting the minimum repayments

While credit cards can offer flexibility when it comes to repayments, it is vital to choose a card that you know you will be able to pay off more than the minimum repayments that are required. A recent study by ME revealed that 32% of Australians failed to meet the minimum repayments on their credit card. Checking a card that comes with a low interest rate can make it possible to effectively manage your repayments. ASIC predicts that cardholder could have saved themselves $621 million in interest in 2016-17 had they chose a credit card that came with a lower interest rate.

Taking ages to pay off purchases

Your plastic may open doors to purchase things with the flick of a wrist, but remember that the money you use on your card is borrowed and will need to be paid back with interest. This is a bad habit that 31% of Australians have which can easily cause them to rake up debt. Budgeting around your credit card can be the most effective ways in which you can manage paying off your purchases. It also helps to only use your card for important purchases instead of piling it up with small purchases.

Withdrawing cash on your card

One bad to curb is withdrawing cash on your card, unless if it is absolutely necessary. This habit can see attracting an average 2-3% transaction fee. There is also a cash advance fee that you need to be are of which can range from 19% to 22%. When compared to the amount which you have withdrawn you will find that this fee is not worth it. This is why budgeting around your credit card is important, which in turn can help you avoid making withdrawals on your card.

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