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The first week of September is MoneySmart week, so what can you do to better manage your finances? One way is to review how you use your credit card/s.

There are sensible ways to use credit cards in order to avoid getting into serious financial trouble down the track. So what are the do’s and don’ts of credit cards? Find out below. 

DO try to repay the whole amount owing by the due date. By doing this, you will avoid having to pay extra money in interest. It will also help emphasise how much money you are putting on your credit card each month and if you find that you cannot repay the amount each month, it’s a sign that you are spending more than you should.

DON’T just pay the minimum amount. The minimum repayment amount that the financial institution charges covers the interest owing and only a small percentage of the amount you borrowed. So, if you are only making minimum repayments, it will take you a long time to pay off the credit card. Even if you are not able to pay the full amount off each month, put as much extra money as you can towards you credit card to not only reduce the amount owing, but the amount of interest you will be charged as well. 

DO consider using a debit card instead. If you like the idea of living in a cashless society and using your card for purchases, then a debit card would be the best option. Not only will you have the convenience of not having to carry cash, but you will only be able to spend the money you have, making you more accountable for your spending. 

DON’T miss repayment deadlines. This is one of the most important don’ts for credit cards.  Missing a repayment due date will not only mean you may have to repay extra in late fees, but depending on the amount and how late you are, the late payment or even a default could appear on your credit report. This means that when you apply for credit down the track, this could affect how much money you are able to borrow. You may not think that one repayment could have such an impact, but it can. 

DO regularly shop around. Just like any type of credit (e.g. home loans, personal loans, car loans), you should consistently review the market to ensure you are still getting the best deal. You may find that after a few months or years, your credit card provider is not as competitive as other companies in the market and it would be worth switching to another credit card company. But remember, only submit an application to a credit provider if you intend to go ahead with them. Every credit application you submit will appear on your credit report and the more you have on your credit report, the more it will hurt you. 

DON’T have multiple credit cards. Having multiple credit cards can be difficult to juggle. There are several risks to having more than one credit card. Some of these risks include: overspending and becoming reliant on credit, not remembering multiple due dates for payments and incurring interest and fees, and it can also affect your borrowing power as lenders will take the credit card limits into account when assessing you financial situation.