Smart ways to use your credit card

How to make your credit card work better for you

Here are tips to avoid costly fees and interest, and make the most of your credit card.

Keep track of your spending

Credit cards are a convenient way to pay for the things you want, but this convenience can come at a cost. It can be very easy to rack up more debt on your card than you expect or are comfortable with, so it's important to stay in control.

The best way to do this is to keep track of your spending. Use our TrackMySPEND app to help manage your expenses, and make sure you regularly check your credit card statement.

Pay your 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 repayments

If you only make the minimum repayments on your card each month, you will pay a lot of interest and it could take you a long time to pay off your balance.

Why not make a plan to get rid of your credit card debt and pay more than the minimum repayment each month.

Use our credit card calculator to work out the fastest way you can pay off your credit card

Credit card calculator

If you're struggling to pay more than the minimum monthly repayment on your credit card, consider switching to a card with a lower interest rate, and pay off more when you can. Find out more about credit card balance transfers.

Video: Laura talks about credit card debt

Credit Card Debt video

Laura finds out it will take her 45 years
to pay off her credit card by using
our credit card calculator.

Transcript: Laura talks about credit card debt

Set a sensible credit limit

Smart tip

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.

Your credit limit is not a licence to spend money. It should be an amount you know you can repay, and one that won't tempt you to spend more than you can afford.

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. 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 without first getting your agreement. This applies to both new and existing credit cards. You can change your mind at any time by contacting your card issuer and asking them to stop sending you these offers.

Whether you decide to opt in or out of receiving offers of more credit, 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 meet

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 debt.

Our webpage 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 card.

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, you should see a financial counsellor who can sort out your debt issues and help you 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 that any potential savings you might earn won't be eaten away by fees and charges.

Check your credit card statement

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 any transactions are listed that 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 properly

There is 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 way.

Take charge of your credit card and make sure you only pay for expenses you have authorised.   

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Last updated: 20 Jun 2017