Credit cards can be a helpful tool in so many ways, especially when you are purchasing something online. While it’s very easy to use a credit card, it comes with a big financial responsibility. If you’re not careful enough, you can overspend and deal with huge balances due to high interest.
Avoid buying what you cannot afford
If you want to buy something and you don’t have cash for it, walk away to avoid putting your card out.
You’ll have no problems if you pay on time and in full. But if this is not the case, here are simple ways to avoid paying high credit card interest.
Compare credit cards
To get the best credit card deal, it helps to shop around first and compare key features of different cards. Look at their interest rates on purchases, cash advances, and balance transfers, minimum repayment, annual and late payment charges, and rewards.
Apply for a credit card with 0% balance transfer
A lot of banks offer credit cards with this feature that enables you to transfer your balance without interest. Keep in mind, though, that having zero interest can mean a higher base interest rate. Make sure to pay all of your debts during the interest-free period to avoid paying higher interest later on. It is also important to know your billing cycle – the interest-free period normally starts at the date of your last statement, not when you buy something with your card.
Look for a card with a longer interest-free period
There are banks that offer cards with interest-free days that range from 44 up to 62 days. This gives you more time to pay your balance every month.
Prioritise the largest debt
If you have multiple cards, pay off the biggest card balance with a high interest. Many tend to pay portions of their debts on different cards but they only end up paying more in interest. Tick the largest debt off your list first then deal with your other debts later on.
Don’t buy it if you can’t afford it
A basic guideline in financial management is avoid buying what you cannot afford, but for a lot of people, they tend to think that credit cards give them a license to spend more. If you want to buy something and you don’t have cash for it, walk away to avoid putting your card out.
If you think you need a credit card, take time in doing your research. Compare credit cards and watch out for their interest rates and fees. And if you already have one, be a responsible cardholder to avoid paying high interest.
Do you know other ways to get the best credit card deals and avoid paying high interest in Australia? You can share your ideas in the comments section below.