28 Nov Keep out of credit card debt
By Ali Roshan
Credit cards can make life easier – they are simple and convenient to use and accepted almost everywhere, particularly online. Living close to, (or often beyond), the credit limit is now normal for many people, encouraging spending to become out of control. This is particularly true as interest rates rise. It’s important to stop and consider whether your purchases are necessary and adjust your spending accordingly.
Use these tips to help stay on top of your debt:
1. Routine is key
It’s easy to let things get away from us. Just like that power bill lost amidst the promotional emails in your inbox or “accidentally” bingeing an entire Netflix season while the laundry piles up. It’s human nature to postpone boring, albeit important, tasks. However, if you create a routine, you’ll complete these mundane jobs simply out of habit.
Try setting a monthly reminder in your calendar to check that your credit card payments are up to date. Paying your credit card balance off in full each month too will help you avoid interest fees. It will also help you avoid any late fees!
2. Make use of technology
If organising skills are not your forte, why not take advantage of the apps and services designed to help? ‘Mint’ is one of the many useful apps that will organise you’re spending into categories, ensuring there is always cash for your credit card repayments. Many banks also provide this through their online portal or apps.
Making use of automatic payments in your banking app can also be helpful. Payments will be made effortlessly on time.
3. Emergency funds will save the day!
You’ve probably heard about the importance of emergency funds, and for good reason! If we’ve learnt anything from the COVID-19 pandemic, it’s how quickly things can change financially. So, whether it’s an increase in the cost of living or a rise in interest rates, it’s vital to have a bit of spare cash handy.
A good place to start is with an emergency fund calculator1. It will consider your income, savings, and living expenses and provide an estimate of how much cash you should be saving for a rainy day.
Realistically, many of us couldn’t get by without our credit cards, but we must use them in a way that only provides a benefit to our lifestyle. The secret to credit card success — be mindful of your purchases and pay the full balance off every month; otherwise, the only winners are the banks.
Ali Roshan is an Authorised Representative (ASIC No. 000378611) of Lifespan Financial Planning
ABN 23 005 921 735 AFSL Number 229892
No Advice Warning – General Advice only
The purpose of this article is to provide general information only and the contents of this article do not purport to provide personal financial advice. EQ8 strongly recommends that investors consult a financial adviser prior to making any investment decision.
The contents of this EQ8 article does not consider the investment objectives, financial situation or particular needs of any person and should not be used as the basis for making any financial or other decisions.
The information is selective and may not be complete or accurate for your purposes and should not be construed as a recommendation to invest in any particular product, investment or security. The information provided in this article is given in good faith and is believed to be accurate at the time of compilation.