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1. Avoid cash advances
Interest-free periods offered on credit card accounts do NOT apply to cash advances. In most cases, you will pay interest on that cash right from the time you withdraw it. ANZ and Westpac cardholders pay a bigger penalty - a fee of 1.5 per cent of the withdrawal. That's $15 straight off on a $1000 credit card cash advance.
2. Choose a card that matches your needs
Make sure that the credit card you use is the most suitable for your spending patterns. If using a card for extended credit and don't pay off the balance in full each month, choose a card with a lower rate. It may not offer any interest-free period, but the lower interest rate should save you more in the long run. If you use your card for the convenience of paying for everyday purchases such as petrol or groceries, try a credit or charge card with maximum interest-free days, then make sure you pay it off in full each month. This way you get the benefit of up to 62 interest-free days on purchases, as well as rewards, discounts and frequent flyer points. But watch the annual fees on rewards cards.
3. Do you qualify for a 'relationship discount'?
Relationship discounts are available from banks and credit unions for those borrowers who consolidate a range of banking business with the one institution. Home and personal loan interest rate discounts, term deposit bonuses, savings account fee waivers and credit card annual fee waivers are commonly offered.
4. Do you qualify for annual fee waivers?
Some institutions offer to waive the annual fee if you spend enough on your card each year, or if you have a home loan or lots of savings with the bank. If your card spend is more than $5000-$10,000 a year you may be able to choose a card with all the benefits you want and avoid the annual fee. But make sure you only use your card to make purchases you were going to make anyway. Spending money for the sake of reducing fees or earning rewards points is false economy.
5. Don't be distracted by sweeteners
Many lenders offer credit cards that include introductory discounted interest rates, rewards programs and insurance. Make sure you look at the overall ongoing cost of credit of any card option you consider - the standard interest rate, interest-free period, annual fees - and weigh these up against the real value (if any) of the added extras.
For more info on credit cards go to
Sydney
Morning Herald web site...[More]
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