How much do you depend on your credit cards?

25 September 2008

Australians tend to be very dependent on their credit cards. The invitation to use credit cards is all around, but people are not always using their credit cards in a way that is beneficial. Credit cards come with different features and before selecting a credit card, a number of factors should be considered.

Here are some quick facts:

Use of non cash payments rose 9% in the last year.
The average person makes around 250 non cash payments a year.
The number of credit card accounts has risen over 5% in the past year.
In the past year, the average owing balance on a credit card has risen 10% to $3139.
72% of credit card holders don't pay off their owing balance each month.

With approximately 25,650 ATMs and roughly 657,500 EFTPOS terminals in Australia, the temptation to use credit cards for everyday purchases is intense. Many people are opting to use their credit cards rather than their own money in their everyday savings accounts. Unfortunately, people are not always aware of the conditions of their credit cards and could be spending money unnecessarily. Credit cards are being used daily and are potentially being used in a way that is not beneficial to the cardholder, thus costing the cardholder more money.

Credit cards are offered with a variety of features. These usually include:

Interest free periods.
Low interest rates.
No annual fees.
Reward programs.

Depending on how you use your credit cards, picking which features work in your best interests is important. If you think you can save money, you might like to consider a balance transfer credit card. With a balance transfer credit card, the owing balances on your current credit cards are shifted to the new credit card. Many balance transfer credit cards come with introductory periods that are interest free or have a very low rate of interest. This is usually for the first six months.

When looking for a new credit card, think about how you use your credit cards so you can select a credit card that is beneficial to you.

If you use your credit card frequently, consider a low rate credit card, a credit card with a rewards program. Interest free periods can be beneficial if you are confident that you can pay off your owing balance during the interest free period.

If you use your credit cards irregularly, such as in emergencies, a credit card with no annual fees might be more suitable for you.

If you have any concerns about your credit cards, consult your financial advisor.

Compare credit cards to find the best credit card deals for your spending habits.

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