The Australian credit card industry has a healthy competition; as a result, there are different types of credit card products available ranging from low interest cards to rewards cards. With all the different benefits and loyalty programmes available, many credit card holders have multiple credit cards.
The benefits of credit cards can also easily be out shadowed by debt. With Australia’s debt standing at $52 billion, $16.7 million of that is credit card debt. It is therefore vital that credit cards are used wisely, and that the debt is paid off monthly.
Pick the right cards for your needs
With a selection of credit cards available, each offering something different you need to filter through and compare them to gauge which cards will offer you the best benefits. Just remember, the best benefit is when a card actually has a purpose. For instance, low rate credit cards, although not offering rewards normally has a low interest rate. Whereas rewards cards such as a frequent flyer credit card will offer points on monies spent, but these type of cards normally have a high interest rate. Therefore, it is best to compare different credit cards to see which card will offer the benefits you need and will use.
Use the cards responsibly
Regardless if you have one or multiple credit cards, the rule will remain the same – you need to act sensibly. Regrettably, those that get into financial trouble are on the rise. For instance, ABC News in February of this year, mentioned that the National Debt Helpline was buckling under the pressure as it received 3000 more calls this January as compare to January last year. Therefore, follow these tips to make sure you can manage your debt better.
Pay on time
With multiple credit cards comes multiple bills, which you need to pay before you have to pay interest charges or a late payment penalty. To help you organise your payments you can set a due date for each card, best to line it up with your pay cycle. Otherwise, set up an automatic payment by paying a certain amount monthly.
Watch your credit score
Multiple cards that are handled correctly can increase your credit score. Nevertheless, if the balance of the cards have high levels of debt, your credit score can drop. Therefore, check your credit score. Then measure it against the average of 760 out of 1200 that is seen as ‘very good’ and which is 73 points from excellent status.
Review the costs of your cards regularly
With 1 in 4 cards attracting an interest of less than 13%, and only 1 in 20 cards with an interest rate of below 10%, it would be wise to regularly review the costs of your cards. Some card issuers also offer bonus points when you switch which may be something to consider if accumulating reward points is the objective.