Smart ways to use your credit card
How to make your credit card work for
Credit cards are a convenient way to pay for the things
you want, but this convenience can come at a cost.
Avoid costly fees and interest by following our tips.
Keep track of your spending
It can be very easy to rack up more debt on your card than you
can afford to repay, so it's important to stay in control.
The best way to do this is to keep track of your spending. Use
app to help manage your expenses, and make sure you regularly
check your credit card statement.
Pay your credit card on time
When you get your credit card statement, check the date the
payment is due, and make sure you pay on time. This will help you
avoid extra interest charges or hefty late payment fees.
To make it easier to pay on time, consider setting up a direct
debit to pay a fixed amount off the balance owing each payday. Just
make sure these payments cover at least the minimum monthly payment
due on the card.
Maximise your credit card
If you only make the minimum repayments on your card each month,
you'll pay a lot of interest and it could take years to pay off
your credit card debt.
Use our credit card calculator to work out the fastest way to
pay off your credit card.
Credit card calculator
If you're struggling to pay more than the minimum monthly
repayment, consider switching to a card with a lower interest rate,
and pay off more when you can. If you switch, make sure to close
the old card so you don't wind up with more debt. Find out
more about credit card balance
Set a sensible credit limit
Your credit limit should be an amount you know you can repay,
and one that won't tempt you to spend more than you can afford.
If you can't afford to pay off your balance each month, don't
increase your credit limit. A higher credit limit makes it too easy
to get into more debt.
Reducing your credit limit
If you want to avoid the temptation to overspend on your card,
ask your credit provider to reduce your credit limit. You can do
this by phone or by visiting a branch. From 1 January 2019, you
will also be able to reduce your credit limit online. In most
cases, your account will be updated within 1-2 business days.
Invitations to increase your credit limit
Credit card issuers are not allowed to send you invitations to
increase your credit limit in any way (including by phone or
online) - even if you previously opted to receive these offers.
This applies to both new and existing credit cards.
You can ask your card issuer for an increase to your credit
limit at any time.
If you need to increase the limit to make a special purchase,
aim to pay the debt down quickly, then lower your limit back to a
more manageable amount.
Don't use credit to make ends
If an unexpected emergency happens, or if you're just running
low on cash before payday, using credit or taking a cash advance is
not going to work for you in the long run. It might get you through
the immediate crisis but, over time, you'll end up even more
Our page on building an emergency fund
has tips to help you build up a savings buffer that will see you
through life's rainy days so you don't have to rely on your credit
We also have lots of guidance to help you if you're having
problems paying debts or dealing with these types of bills:
To get free and confidential debt help, see a financial
counsellor who can help you sort out your debt issues and
reduce your reliance on credit cards.
Use store cards wisely
It can be tempting to get a store card if you shop regularly at
a particular retailer. Purchases paid for with these cards
might earn rewards points or
give you access to discounts or other exclusive offers. But think
twice before you sign up for store cards, as there are often fees
attached (like annual and service fees), and the interest rate
might be higher than other cards.
Check the terms and conditions carefully to make sure any
potential savings you might earn won't be eaten away by fees and
Check your credit card
The best way to check your monthly statement is to keep all of
your credit card receipts each month, then tick them off against
the charges on your statement. This will help you check that you
have been charged the right amount for the things you bought, and
that you have not been charged for anything you did not buy.
Even if you don't keep your receipts, here are some things you
should look for when checking your credit card statement:
- Charges by companies you do not recognise
- Large or unusual charges
- Changes in direct debit amounts
- Duplicate charges
If there are any transactions you didn't make, contact your
credit card provider immediately, as they may be able to reverse
the transaction. See unauthorised and
mistaken transactions for more details.
Close your credit card
There's more to closing a credit card account than just cutting
up the card. Visit our how to cancel a credit card
webpage to find out how to close your credit card account the right
Take charge of your credit card and make sure
you only pay for expenses you have authorised.
Last updated: 11 Oct 2018