November 24, 2017

Top 6 Common Credit Card Myths

Credit cards from different banks vary in so many ways. To get the best credit card deals, it is important to do your research and compare credit cards from two or three providers. After weighing the pros and cons of each, you’ll be able to choose the right one for your needs and preferences.

Some people may frown upon the idea of getting a credit card. However, by using it the right way, it can be helpful in managing your finances. In this article, let’s take a look at six common myths associated with credit cards:

1. Having a credit card will negatively affect your credit score

A high credit score will greatly help you when you plan to get a major loan.  Is opening a credit card a good idea? In this case, not really. It’s all about the timing. If you have a low credit score, it’s not wise to get a credit card, especially if you intend to get a home or car loan in the next few months.

2. Going beyond the credit limit will not be a problem

There may be instances when you have purchases that went over your credit limit. Your credit card company may let you off the hook, but not all the time. There’s a reason you have a credit limit in the first place, and if you overspend, you’ll end up having to pay fees. Your card provider can also raise your interest rate.

3. Leaving a balance on a card can improve your credit score

When you use your credit card, it actually helps improve your credit score, but it’s not the same when you leave a high balance on your card. Aside from having to pay unnecessary interest charges, lenders may think that you cannot pay your debts.

4. Balance transfers can help you save money

If you have multiple credit cards, you may be tempted to transfer balances to a credit card that offers much lower interest rates.  As with anything else that has a contract, always read and understand the fine print. Check if there’s a fee for transferring balances to a new card, or that the low interest rate will not apply to new purchases. When you compare credit cards, make sure to check details like this.

5. Get only one credit card

When you’re just starting to build your credit score, this is a good idea. But if you think it’s beneficial to get more than one card, and you’re confident and responsible enough to pay on time and in full, then by all means get another one. Get the best credit card deals in terms of rewards and benefits that are aligned with your lifestyle.

6. Paying only the minimum amount due every month will not hurt

While credit card companies always require a minimum payment per month, try to pay on time and in full on a regular basis. This indicates that you can manage your finances well, which will help improve your credit score.

Do you have other tips on how to get the best credit card deals? Share your ideas in the comments section.

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Tips for Managing Your Credit Cards

A credit card is one way to handle money. While some people frown upon the idea of having one or more credit cards since there’s a big possibility of having too many debts, there are others who successfully manage their credit cards, avoiding debts and other charges. Of course, having a credit card comes with many pros and cons. You can use it to your advantage or be a victim of huge debts

If you’re planning to get a credit card, keep in mind that not all cards are created equal. Compare credit cards and their features. Once you know their offerings, you’ll be able to choose the best credit card deals based on your needs and preferences.

How can credit cards help you manage your finances? The key is proper management. It will not only keep your money secure but also help you get significant savings. Here some simple tips for managing your credit cards:

Pay on time and in full

This is one of the crucial things to do to avoid having huge debts. If you miss paying on time and/or even just the minimum monthly payment, you will be charged a late payment fee or interest on your purchases. As much as possible, make sure to pay the full amount on or before the due date.

Be aware of the interest-free period

Paying in full and on time comes with another benefit. Most credit card providers offer an interest-free period on purchases, but it will only apply if you’ve paid on or before the due date and that you have no balance from the previous month.

Watch out for discounts and freebies

Credit card providers usually have a rewards system for those who always use their card. It depends per card and provider, but you may get extended warranties on products, discounts on restaurants and other establishments, travel insurance and freebies on hotels and tour packages.

Use alerts

Avoid any form of scam associated with credit cards by setting up alerts that will inform you of your credit card activities. Your provider can either send you an email or text message if they detect anything suspicious. Also, you can use alerts to notify you of the due dates so you can pay in full and on time.

Got other ideas on how to manage your credit cards and get the best credit card deals? Share your tips in the comments section.

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5 Tips to Avoid Overspending on Your Credit Card

Many people use credit cards for different reasons. Some use their card to buy major purchases while others find it convenient to shop online or book a trip if they have a credit card. The best credit card deals also offer a range of rewards and discounts which can be beneficial to you. However, having a credit card comes with a big responsibility. If you’re not careful, you may end up overspending and have to deal with huge debts, not to mention the high interest.

How can you avoid overspending on your credit card? Here are five tips to consider:

1. Know the features of your credit card

Make sure you are aware of your due dates, cut-off periods, and interest rates. This will help you better manage your spending. If you’re planning to get a card, make sure to compare credit cards from different banks and choose which best suits your needs and lifestyle.

2. Leave your card at home

Marketing tactics can sometimes be stronger than our willpower to resist the temptation of buying things that we don’t really need, so it is best to leave your credit card at home. Bring it only if you have a planned purchase such as grocery, appliances, or to book a trip.

3. Consider cash as the only option

If you don’t have cash, that means you cannot afford it or you don’t really need it. Don’t treat your credit card as an extension of your purchasing power.

4. Think about your current balance, not your card limit

Do not use up your credit limit only because it’s there. To avoid overspending, keep your current balance in mind. This can greatly influence your spending habits. You can also set your personal credit limit that’s way lower than your available limit.

5. Keep track of your spending

Be a responsible credit card holder by monitoring your expenses. There are many financial institutions that offer apps which you can download to help you in tracking your spending wherever you go. If you’re up-to-date, you’ll know when to stop using your card and when to pay your outstanding balance.

Having a credit card is not a bad thing, but it takes a lot of self-control so you don’t go overboard with your expenses. Don’t max out your credit card. Keep these simple tips in mind so you can avoid overspending on your credit card.

Do you have other tips on how to avoid overspending on your credit card? Share your ideas in the comments section.

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Common Credit Card Fees and Charges

Many Australians use credit cards as an alternative to cash when purchasing certain items and/or availing various services. Different banks in Australia offer a wide range of credit cards which vary in a lot of features. One way to know which is the right one for you is to compare credit cards. This will greatly help you find out the pros and cons of each card, enabling you to have a well-informed decision.

When looking for the best credit card deals, it is important to learn about the common fees and charges involved. These will depend on the type of card that you have but in general, be aware of the following credit card fees and charges:

  • Annual fee – this is the yearly fee that is usually charged upon activation of your card
  • Purchase interest rate – this is the interest rate when you make a purchase
  • Balance transfer fee – you will be charged when you transfer your balance from the credit card of another bank to your card from a different bank
  • Cash advance fee – you will pay this fee when you withdraw cash or make cash equivalent transactions from your card
  • Late payment fee – you will pay this charge if you fail to make the minimum payment on or before the due date for a certain month
  • Replacement fee – this is the charge in case you lost your credit card
  • Over the limit fee – this is the fee when you go over your card limit
  • International transaction fee – you will pay this fee if you use your card to make purchases when you’re overseas
  • Foreign currency cash advance fee – you will pay this fee when you withdraw cash from your credit card when you’re overseas
  • Foreign currency conversion fee – this is the charge when you use your card overseas or make a purchase online that comes from a different country

These are the common credit card fees and charges. Again, these vary depending on your bank and the type of credit card that you use. That is why it is essential to compare credit cards so you will know what to expect as far as fees are concerned. While you cannot completely avoid some of them, being aware of what comes with a fee will help you better manage your monthly payments.

Got other tips on how to get the best credit card deals in Australia? Share your ideas in the comments section.

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Is Lounge Access Really Important When Choosing a Credit Card?

There are a number of credit cards that provide airport lounge access. An airport lounge is provided by an airline or independent owner offering an area where people can meet, rest, or work in a quiet and peaceful environment outside of the hustle and bustle of the airport.

The lounge usually provides its guests with high speed internet connection, phones, TVs, fax machines, complementary drinks and beverages as well as a host of other services. Some airport lounges even provide massages and showers. There are different ways that you can gain access to an airport lounge, such as flying as an elite frequent flyer, flying in premium cabins, purchasing a lounge program membership or a day pass. Another common way that people can gain access to the airport lounge is by holding a credit card that provides such services.

Do I need lounge access?

Lounge access is only going to benefit you if you make frequent trips. If you travel once or twice a year and you want to have lounge access, you should take advantage of a lounge access day pass. If you are a regular domestic traveler, it might even be beneficial for you to pay the annual fee on an eligible credit card for lounge access.

Which Credit Card Provides Lounge Access

Before submitting an application of a credit card that provides lounge access, you should compare features of different credit cards and make sure that you are getting the best deal.

City Prestige Visa Infinite

If you travel frequently with more than one person, this credit card waives the fee for an additional guest. You will have access to airport lounges all over the world including Dubai, Hong Kong, Paris, Bangkok, London and many more.

Diners Club

No matter which club card you apply for, you will have access to more than 500 lounges worldwide through Diner’s personal network. All of the participating lounges are available on the Diners Club’s website.

ANZ Black Card Frequent Flyer

ANZ provides its frequent flyer black card holders with unlimited access to over 60 airport lounges around the world. One of the most prestigious airport lounges available to ANZ card holders is the Auckland New Zealand Emperor Lounge.

Westpac Altitude Black

Westpac card holders are eligible for two free visits to the airport lounge in Sydney no matter what airline you are travelling with.

Final Thought

It is not essential that you choose a card that offers lounge access; however, if you travel regularly and you want to reap the benefits of an airport lounge then start looking for the best credit card deal that provides you with lounge access.

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3 Benefits of Not Using Your Credit Card for 12 Months

Australians use different payment methods. While paying in cash is quite common, the use of credit cards has also become a go-to way to pay for products and services in Australia. In fact, there are studies which reveal that credit card debts, together with personal loans, are beginning to get out of control. Credit cards have made it very convenient for people to spend money that they don’t have. As a result, some people find it hard to get out of credit card debts. Of course, it helps to compare credit cards from different banks as they come in various features. So it pays to do your research to get the best credit card deal.

But what if you stop using your credit card for a year? For some, this may be easy, but for others, it will entail planning, budgeting, and a change in mindset. Not using your credit card for 12 months can in fact be beneficial. Here are the three benefits of stop using credit cards:

You can get discounts

The mere act of using cash for payments on various products can offer certain discounts, which you probably won’t get when using your credit card. In general, all you have to do is to ask if you can save some money just by paying in cash. There is usually a credit card fee of up to 4% of the purchase price, so not using your credit card for a while could possibly lead to more discounts for your purchases.

You can be debt-free sooner than expected

If you prefer to use your credit card instead of cash for payments, chances are that you’ll have more debts and if you’re not careful, you may end up paying huge monthly repayments. This wouldn’t be a problem if you can afford to pay in full every month. By not using your credit card for 12 months, you could possibly pay more than the minimum repayment per month. Later on, you will be able to pay in full and before you know it, you’ll be able to get out of debt much faster.

You can save money

A lot of people have this mindset that a credit card is an extension of your cash. Sure, you will be able to buy what you want but the problem is that people tend to spend money that they don’t have. If you stop using your credit card for a year, you can get out of debt more quickly, enabling you to allot more money to your savings.

Do you know other benefits of not using your credit card for a year and how to compare credit cards in Australia? Share your ideas in the comment section.

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5 Things to Check Before Choosing a Credit Card

Before anything else, the first question to ask yourself is, “Should I get a credit card?” Getting a credit card comes with certain responsibilities, so it pays to think long and hard why you should get one. One of the benefits of having a credit card is it can greatly help you build your credit record, which is then important for when you need to get a loan in the future. It is also an important tool in case of an emergency when cash is not readily available. However there are some disadvantages, the main one being that you can get into debt very quickly because you are spending money that isn’t yours. You will have to pay this money back, usually at a high rate of interest, so a credit card could end up costing you a lot of money.

Should you decide that you need a credit card, here comes the second question: How can I pick the best credit card for me? Here are five things to take into account:

  1. Determine the Annual Percentage Rate (APR)

As much as possible, it is essential to pay your balance in full. Otherwise, you will have to deal with the Annual Percentage Rate. This is the interest rate that you need to pay on top of your actual balance. There are several banks that offer lower or zero interest rates for the first few months or year. Check what the APR is when looking for card options. In general, the lower the APR, the better. However, some banks provide interest rates according to your credit score, so it is best to check with the bank if they offer fixed interest rates or not.

  1. Be familiar with the fees

One of these is the annual fee. Some banks charge an annual fee, others don’t. But before you lean towards those that do not require it, make sure to check the fine print. While it would be great not to pay a fee for every year that you’re using the credit card, the rewards and perks of cards with an annual fee generally more than make up for it.

Another fee to consider is the foreign transaction fee that you pay for when you use your card overseas. Take note that not all banks charge this fee for every dollar you spent when in a different country.

You also need to look at the balance transfer fee or the amount you pay when you move your balance from one credit card to another. At first glance, this is a benefit since you can transfer balances to the card that offers a lower interest rate, but the balance transfer fee may be higher than if you opt not to transfer.

  1. Know the credit limit that you can handle

If it’s your first time to get a credit card, it may be wise to have a lower credit limit. It can help you get used to spending with a credit card, plus it can teach you a thing or two about managing debt. Once you’ve learned how to manage your finances and spending habits, you may increase your credit limit. Having a higher credit limit has its benefits, too. For instance, it can eventually help you in establishing a good credit score, provided that you keep your monthly balance lower compared to your actual credit limit. Of course, do not get a card with a credit limit that allows you to have more debt than what you can actually pay off.

  1. Check the rewards program being offered

This is probably one of the major deciding factors when choosing a credit card. Every time you use your card, you will earn points which can then be used in exchange for different types of rewards. One way to determine the best credit card for you is to know the rewards that suit your lifestyle. Do you love to travel? You can pick the credit card that offers travel vouchers and discounts on airfare and hotels. If you’re into shopping, there are rewards programs that feature discounted prices on online retail stores, supermarkets, and other shops.

  1. Know if you can manage your account online

In this day and age when most transactions can be done through laptops and smartphones, it is best to pick a credit card from a bank that offers a range of online capabilities that will make account management more convenient. You can do automated transfers and online payments. You can also easily view your account, helping you keep track of your balance.

Final Thoughts

Choosing the best credit card for you can be daunting at first. There are several factors to consider and sometimes, this takes some time. Assessing your spending power, lifestyle, and preferences can greatly make the selection process easier. These five things to check when choosing a credit card are likewise helpful so you can make the right decision.

Having problems in choosing the right credit card for you? Share your comments below.

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What is an Interest-free Period on a Credit Card?

One thing credit cardholders are wary about is the interest payable. Some may wonder how interest and purchases are calculated to come up with the monthly bill, while others may not take the time to understand it. It can be a bit confusing but as a credit cardholder, it is important to be aware of what affects your monthly bill. One of these can be the interest-free period.

What is Interest-free Period?

When it comes to credit cards in Australia, the interest-free period refers to the days when a purchase will not incur interest. For some credit card providers, this period can reach up to 55 days. It does not mean that you will have 55 interest-free days for every purchase you make.

How does the Interest-free Period Work?

Let’s assume that your billing cycle starts on the 1st day of each month, and ends on the 30th of the month. If your credit card offers an interest-free period of 55 days, this means that once the billing cycle ends, you have 25 days to pay the full balance. The interest-free period depends on the date you made a purchase. If you purchase something on the 1st day of the month, this will not incur any interest until the due date, giving you 55 interest-free days. However, if you make a purchase on the 30th, you will only get an interest-free period of 25 days.

Choosing the Best Credit Card Deals

A lot of banks offer credit cards with an interest-free period, but how will you know if it is suitable for you? As long as you can pay your balance on time and in full every month, you will not have a problem. You can set up reminders on your phone so you don’t miss any due dates. If you fail to pay your balance in full on or before the due date, you will not be able to use the interest-free period, which means that you will pay interest.

To get the best credit card deals, make sure to shop around first. Compare credit cards as these vary in features and billing cycle dates, so choose one based on your needs and financial capacity. Keep in mind that the interest-free period does not apply to cash advances, and if you plan to pay only the minimum payments every month, you will not be able to get the interest-free period. Also, when you compare credit cards, ask if there are promotional offers or rewards when you make purchases.

Got other tips on interest-free period and how to get the best credit card deals in Australia? Share your ideas in the comments section below.

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Tips on How to Avoid Paying Expensive Credit Card Interest in Australia

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.

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.

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3 Things Your Parents Should Have Told You About Credit Cards

Listening to wisdom from generations before us can be challenging, and unfortunately, it is human nature to be rebellious. When we get to the age of 13 we think we are adults, and at 18 that we have mastered the mysteries of life. It is not until you reach your mid 30’s that you think back and wish you had listened to the advice that your parents had given you. What if there were certain things that they didn’t tell you, like how to manage your credit? A lot of parents don’t teach their children how to be financially responsible and this can be detrimental later on in life. Here are 3 things your parents should have taught you about credit cards.

Lesson 1: Unexpected Fees

Interest charges are not the only fees you should expect to pay on your credit card. These include: balance transfer, cash advance, foreign transaction and annual fees. Before you apply for a credit card make sure that you read the terms and conditions to find out what fees you will have to pay. Also, some credit cards have lower fees than others, compare credit cards and see what will be financially viable for you.

Lesson 2: Interest is Not Cheap

When you carry a balance on your credit card it means that you will end up paying more interest. Every purchase will incur interest from the day of purchase until it is paid off. In other words, when you buy something, the price that is written on the receipt is not the price that you actually pay when you calculate the interest charges. Some credit cards have a higher interest rate than others; therefore search for the best credit card deals before applying for one.

Lesson 3: You Will Still be Paying Off Credit Card Debt After University

The majority of students in Australia get through university on credit. When cash gets tight, they live off credit cards and bank overdrafts. What people fail to realise is that a job is not guaranteed after university, you are not going to walk off the podium and walk into a full time position. You are going to be unemployed while you are looking for work. During this time, your credit card bill isn’t going to stop coming. This is how the debt cycle begins, you end up borrowing more to pay back and get into more debt.

When it comes to credit card use in university, use it for emergencies only and pay it back straight away so that the only debt you have when you graduate is your HECs debt or student loan.

Final thought

As long as credit cards continue to exist, people are always going to spend money that they don’t have. If your parents didn’t give you the pep talk on credit, you are going to have to learn by experience and that often involves getting into debt.

Compare credit cards before applying to avoid high interest rates and other fees. You should also pay your balance off in full every month.

Got any other tips your parents should have taught you about credit cards? Let us know in the comments section.

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