6 Simple Steps To Use Credit Cards Responsibly

By Emma Edwards
29th Mar 2021

a woman shops in a grocery store, full of colourful aisles.

There’s no denying that credit cards can lead to overspending. Research has shown that when you use a credit card for purchases, you spend 14% more than when using cash or a debit card. But, that’s not to say there aren’t ways to tap your plastic responsibly.

Here are some nifty ways to help you be more credit-savvy.

Pay Your Balance In Full Each Month To Avoid Interest

If you pay your credit card balance off in full each billing cycle, you won’t pay any interest. If you are tapping your credit card for purchases, either essential or discretionary, make sure it’s paid off before your statement’s due date. Keep on top of your payment dates to ensure you don’t pay interest or pay everything off from a debit card immediately after you’ve used credit.

Keep Your Peepers On Your Annual Fee

Some credit cards charge an annual fee, though usually this brings with it perks or rewards. Before you take out any credit card with an annual fee, be sure to dig into how much value you’re getting for that fee within the context of your environment. Keep an eye on any annual fees you do pay on credit cards, too. Fees can be hiked, and rewards removed, so you might not always be getting the value you thought you were.

Check In Regularly With Your Transactions

The key to not overspending with credit cards is to regularly check in with your transactions. You might think you’re only using it for essentials but end up tapping it by mistake or ‘borrowing’ from yourself the day before payday, and these things can add up.

Earn Rewards Paying Bills

If you have a points-earning credit card, you may be able to get more bang for your buck by earning reward points every time you pay your bills. When you pay your regular expenses automatically with your credit card, you could rack up some serious bonuses over time. Always make sure your points credit card is worth the annual fee, though, and remember to pay the balance in full each month!

Don’t Apply For Too Many Cards

Each time you apply for credit, it’s recorded on your credit score. So, while you can hear a post-COVID Bali trip calling your name, cool your jets on applying for frequent flyer cards. Sure, getting a bonus hit of points from one card might be worth looking into, but applying for five different cards isn’t going to look too cute from a credit reporting perspective, and could impact your ability to get loans and mortgages in the future.

Make The Most Of Purchase Protection

There are some instances where paying with credit can give you additional protection, which can be a smart way to safely make large online purchases. Many credit cards in Australia come with insurances that protect your purchases, from extended warranties to best price guarantees and even cover if your purchases are lost or stolen. You also may be better protected when booking travel or hotels with a credit card in case there are issues with your airline or provider.

If you haven’t had enough adulting for one day, give your resumé a once over with this handy guide on things you need to ditch right now.

Image Credit: RF._.studio/Pexels

Emma is a finance blogger at The Broke Generation and a reformed spendaholic. She shares hot tips on saving, property, tax, career and investing for millennials who want to break the spending cycle and get financially confident.

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