The biggest danger with credit cards is the temptation to buy things you can’t afford and don’t need. The secret to smart money management is a budget and a limit on your credit card that you know you can afford.
Regardless of the financial institution or company you go to, there are basically two types of credit cards available:
- One charging an annual fee but offering an interest free period of up to 55 days – after which interest charges are quite high
- One with no annual fee but interest charged from the date of purchase. The interest rate on this card is usually lower and may suit you if you cannot pay off your credit card debt at the end of each month.
- Ask yourself what kind of scheme will best meet your needs
- Shop around for the lowest rate of interest
- Be aware of financial charges
- Check the fine print and understand all the terms and conditions before you sign up.
Once you find a card:
- Work out your budget and fix a realistic limit
- Pay bills promptly to keep interest charges to a minimum
- Avoid cash advances. With most schemes you pay interest charges from the date of the advance
- Keep all your receipts to check the charges when your bill arrives
- Protect your card and account numbers to prevent unauthorised use.