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Whether it’s your first time applying for a credit card or you’re looking to change to a different one, you need to have a good think about what you’re looking for and how you’ll make best use of your card. You may have experienced or heard stories of people getting a credit card on an impulse, and the traps and pitfalls that can go with it. So why not learn from their mistakes?
Credit cards have many great benefits for you as long as you manage the card, and not let the card manage you.
Stay within your means
Victoria Wildie, is an independent theatre producer, who has first-hand experience of the risks of not managing credit cards wisely, “In my profession you have times when money can be a bit scarce, so a credit card is really useful”.
“I learnt early on that you have to be careful to use the card within your means and make sure that you pay it off every month. It’s not hard to do, but you do have to think about what you can afford before choosing your credit card.”
Ask an expert
Ingrid Just, is spokesperson for Consumer Advocacy Group, Choice. “The important thing is for consumer is to do their homework. A little bit of time spent on this can save a lot of problems. Our research has identified common mistakes that consumers make when using credit cards that could easily be avoided.”
The top 5 things to avoid
Here are 5 things you shouldn’t do when choosing your credit card.
1. Choosing the wrong kind of card
Solution: Inform your choice
Make sure you’re not choosing a card for the wrong reasons. Know what fits within your means and lifestyle. Understand your spending habits and work out a monthly spend that you can manage.
“You really need think about your financial habits and how much you will use a credit card,” says Just, “For example; if you’re a high spender then a rewards card might work for you. If you’re a low spender, then a low interest card might be the way to go. “
We have a simple 4-step selector tool that will help you find the right credit card.
2. Not knowing enough about the fees and charges
Solution: Read the small print
It’s essential to get down with the detail. Just agrees, “Dismissing fees and charges is the biggest mistake that consumers make with credit.”
The fine print is where you’ll find the important information about the benefits and penalties that go with your credit card. Knowing about things like balance transfers, the interest rates after the honeymoon period, and the interest free period, all help you become more aware of how you will be able to get the most out of your credit card. A question of interest is your guide to using your credit card wisely.
3. Making late payments
Solution: Pay by the due date
This is how you avoid fees and charges like interest and late payment penalties. As Victoria Wildie has learnt, “I make my payments 3 days before they are due. That way I know that that my payments will be on time and I’m not at risk of incurring any fees and charges.”
We have a range of convenient ways to help you meet your payments: You can use Autopay to help avoid late fees, or get more flexibility through regular instalments . We can even set up SMS or email reminders 5 days before your payment is due to make sure you never forget.
4. Missing out on the benefits
Solution: Understand the bells and whistles
“You need to look behind each card to really understand what it offers, and the conditions that go with that card”, says Ingrid Just of Choice.
There are cards, for example, that offer complimentary travel insurance* or points redemption at Flight Centres as part of their value, such as the CommBank Gold, Platinum and Diamond Awards card. Some offer Qantas Frequent Flyer points which may have flight blackout periods, a detail often overlooked by consumers. That’s not the case at CommBank. Our partnership with market leader Flight Centre means you can redeem any seat, anytime, anywhere.
5. Being liable for charges you haven’t made
Solution: Report your card if lost or stolen
Another common mistake is to put off reporting your card as lost or stolen in the hope that you will find it again, and so avoid the time consuming process of having your card re-issued. The danger is that you are still liable for all charges on the card, and if it has been stolen, someone could be profiting at your expense
Our solution is simple: If you lose your card and let us know, we can offer a temporary stop, meaning if you find it again, you won’t need to apply for a replacement card.
Learning from the experiences of others will put you in the driving seat to ensure that you pick the credit card that’s right for you.