Did you know that Australia’s ‘personal debt’ has been reported as the highest in the world, according to Finder.com.au?  Australia’s debt has increased drastically over the last thirty years. Even though most of us enjoy the benefits of credit cards, it can become a serious issue if we let it get out of control.

Here are six smart ways to get the most out of your credit card.

#1 Make payments on time

Ensure that your credit card bill is paid on time. This will help you avoid unnecessary late payment charges or paying for interest. When you receive your credit card statement, make a note of the payment date and ensure that you have set up a payment for (or before) the due date. Even better set up a direct debit. Either pay the minimum charge each month or the full amount if you know you’ll always have enough money in your account. This allows you to take advantage of collecting bonus points, it will give you the flexibility of using a credit card and means you also avoid any excess payments.


#2 Track your expenses

It may sound boring but the best way to stay on top of your credit card is to track your spending. More often than not credit card users accumulate more debt than expected. That’s why it is important to take control of spending. All it takes is 30 minutes or so each month to review your monthly budget and credit card statements.


#3 Have an appropriate credit limit

What is a credit card limit you are comfortable with? Having a $5,000 limit you use to pay for groceries, bills, the dentist and car services is a smart option (as long as you only ever buy what you can afford). However, having a $30,000 limit when you have no savings and are living ‘above your means’ is crazy.

Having a credit card doesn’t mean you have ‘free money’. With compound interest you can end up paying three times the original price of a purchase or more. Makes going ‘old school’ and saving up for a purchase sound pretty good, right?

Remember, you need to be able to pay the money you spend back. If you aren’t able to pay off your balance, never increase your limit as this only leads to more debt. Instead, stop using your credit card immediately and focus on paying down your debt.


#4 Review your credit card statements

It is almost all too easy to get carried away with a credit card. But there is an easy way to monitor where the money goes. Put all of your receipts into a folder each month and check these off against the charges on your statement. This will help you to identify the correct charges for each purchase. It will also help ensure that you weren’t charged for something you didn’t buy. If you are unsure what a purchase is then call your credit card company ASAP to query it.


#5 Managing personal debt  

Credit cards are an effective way to help manage your cash flow but only use them when necessary. If you plan your spending (and how much you intend to pay off your card) for the month then this will give you more control.

If you have more than one credit card, think about how you can best manage this. Consider consolidating all of your credit cards onto one new credit card. Ideally choose a credit card with a very low interest or take advantage of an interest free period to give you a chance to save and pay down as much of your debt as possible. Call around and do some research to take advantage of the best deal. At least ask your bank for a better interest rate. If you stand your ground and threaten to move banks they will usually offer you a better deal quickly.


#6 Speak up if you need financial help

Help is always available so don’t be afraid to ask. If you find yourself having trouble meeting your credit card repayments, contact your bank to go over alternative solutions. Concealing or ignoring money issues only makes things worse. By speaking up and seeking help you can create a realistic plan of attack and start controlling your debt rather than have it control you.