If you're looking for ways to tighten your belt follow these simple tips to begin saving money on your credit card immediately.
1. Shop around
Let's face it - there are some shocking credit cards out there. Over the past few years interest rates have risen steadily and it's now common to see purchase rates of around 20%. But that doesn't mean there aren't good deals out there.
Use online comparison tools, seek advice from your financial planner and be sure to check a broad range of financial institutions including credit unions.
Remember, you're not (usually) locked into your credit card. You can choose to close it at any time and transfer your balance to a different card, so regularly check what's available. If you find a credit card offering a better purchase rate, longer interest free terms, a lower annual fee or even a good balance transfer deal, think about switching.
2. Do you really need that rewards program?
If your card has a rewards program, chances are the costs of that program are integrated into the fees and charges of your card. You may be paying a higher annual fee or a higher interest rate.
Try to determine whether the rewards program gives you a good return on your investment. If you're not using the points you may be paying too much.
3. Avoid cash advances
There are three good reasons why cash advances should be avoided:
- Most cards have a higher interest rate for cash advances than for purchases
- Cash advances are not subject to any interest free period
- Most banks charge a fee for each cash advance
If you need cash, think about linking your card to a savings account.
4. Avoid unnecessary fees
The fee for exceeding your credit limit or for late payment is usually between $10 and $50. If you need to go above your limit, talk to your bank about a credit limit increase. If you're having trouble remembering to pay on time, contact your bank regarding a direct debit arrangement.
5. Pay more than the minimum repayment
If you're choosing to pay only the minimum amount each month, it can take decades to pay off your card. You can use our repayment calculator to see how paying small amounts above your minimum repayment each month can significantly reduce your balance.
