Credit cards are an easy way to pay for things with a quick swipe or tap, but they can be expensive. High interest rates apply if we don’t pay off the card in full each month – and the longer that debt goes unpaid, the more its costs can drag us down. Here’s how to keep those cards under control, with a few tips for credit card management.
Credit card interest rates can range from 12% to more than 20%. Cards with low interest rates usually charge higher annual fees.
Can’t seem to get that balance down to zero? It can be worth looking into balance transfers. These are special offers to transfer a balance from a current card to a new one with a different lender – but at a much lower interest rate.
When taking up a balance transfer offer to pay off credit card debt, it’s best to cut up and cancel the old card to avoid running it up again. Also, check the details of the offer, as any new purchases might be at a different interest rate.
Most credit cards offer interest-free days and charge an annual fee. Fees can be up to several hundred dollars a year and the number of interest-free days can range from 0 to 180.
Sometimes it may seem like you’re paying more than you should, in which case, call the bank and ask for a better deal. If they can’t come up with a better offer, consider changing cards.
For more information about current interest rates, interest-free days and fees visit the interest.co.nz website.
Debit cards are an alternative to credit cards with much of the same convenience. However, with a debit card, instead of borrowing money and potentially being charged fees and interest, we spend our own money that is preloaded onto the card. These are much like Eftpos, but with additional credit card features, like being able to be used for online purchases.
Debit cards are helpful for two reasons: we don’t risk spending more than we have, and we avoid the interest and fees that come with credit cards.
But buying on cards leads to us spending more in general – up to 30% more than using cash. Some people like to try just paying with cash for a while as we’re often more reluctant to hand over a big stack of notes for purchases. It’s so easy to swipe a credit card and not feel the impact of the money going out.
Use our debt calculator to work out how quickly you could clear your credit card balance and get out of debt.
Credit cards are great right? When you see something you need, you can have it.
6 Comments | 29 Oct, 2018
“Swipe right for Mr Right” – this whole Tinder swiping thing has become part of culture these days.
1 Comment | 10 Aug, 2018
Would you go to a “Death Café”? These are pop-up gatherings of people who come together to talk about the ultimate taboo: our mortality.
6 Jul, 2018
There’s one thing we can say with some surety: we don’t always make the best decisions for our situations, especially with money. It’s part of being human.
14 Jun, 2018
With so many decisions to make these days, the “family first” rule of thumb can make things simpler. Especially money choices.
1 Comment | 5 Jun, 2018
If you’ve ever spent time in Los Angeles, the city may have seemed like an inside joke: you end up scratching your head, wondering why you just don’t get it.
1 Comment | 27 Apr, 2018