Credit cards are ideal for short term borrowing, or ato spread the cost of larger purchases.
The key to making the most of a credit card is only borrowing what you can afford to repay. This means having a clear idea of how much you can afford to spend on your credit card and keeping an eye on your balance throughout the month, so that you don’t exceed your planned spending.
Ideally, you should aim to pay off your credit card balance in full every month. That way you won't be charged interest on your spending.
For many people that may not always be possible. If so, there are some rules and guidelines you need to follow if you want to make the most of your credit card.
Always pay at least the minimum amount: This is set by your provider and is a percentage of what you owe plus interest.
Pay more than the minimum if you can: Paying off as much as you can will save you interest and clear the balance faster.
Pay off your most expensive cards first: If you have several cards, put as much as you can afford towards paying off the card with the highest APR, and make minimum payments on the rest.
Your credit card comes with a credit limit, which is the maximum unpaid balance that you can build up on your card. Make sure that you know what your credit limit is and if you need an increased limit, contact your credit card provider.
You will be charged a fee if you go over the credit limit without authorisation, so make sure you pay off enough each month to stay under your limit. Here is how credit card limits work.
Missing a credit card payment can be expensive, as you’ll likely incur late fees. A missed payment can damage your credit score too, making it more difficult and costly to borrow in the future.
One easy way to ensure you never miss a payment is making automatic payments by setting up a direct debit. You can set up a direct debit using either your online account or by calling your provider.
Paying by direct debit is the easiest method because the money will come out of your account every month without the possibility of forgetting to pay.
You can set up your direct debit to pay the full balance, the minimum payment or a fixed amount. You can also pay your bill:
Through your online banking account
By bank transfer using internet banking or in a branch
By cheque sent to your bank when you get your bill
By standing order for a fixed amount to your credit card company
In person with cash if your provider has a local branch
Remember that if you do not pay the full balance, you will be charged interest on the outstanding balance until it is cleared (excluding any promotional interest-free rates).
Even if you don’t set up a direct debit, there are a number of ways to pay your credit card bill on time. You can typically pay your credit card bill using Faster Payments, by debit card or by cheque.
Cash withdrawals on credit cards are not free and can be costly, unlike debit card withdrawals.
Although you can technically use a credit card to withdraw cash, it is an expensive way to access cash and it can impact your credit rating too. When you withdraw cash with a credit card, you will incur charges and leave a mark on your credit history.
Find out more about withdrawing money on a credit card here.
You can check your balance online, on your most recent paper statement, or you can ask for your balance by phone or check it at a cash machine. Some providers also send text messages to confirm your balance and remaining credit limit either any time you text them to request it or once a week or month. These days it’s common for most credit cards to offer a smartphone app, which allows you to check your balance and make payments.
It is important to check your credit card balance to make sure that there is no fraudulent activity on your card. You can find out more about how to repay your credit card here
If your card is lost or stolen, let your provider know immediately because someone else could use it online, over the phone or for contactless purchases.
You should be refunded in full for any transactions that happen after you have lost your card.
Record the time you informed your provider and the last transaction you made yourself. You can contact them by:
Calling your provider
Logging into your online account
Going into a branch
Using your mobile banking app
Your provider will then cancel your card and send you a new one by post.
If something goes wrong with a purchase, like the company you buy from goes out of business, or they fail to supply what you ordered, you may be able to make a claim by using one of the following options:
Although you can approach your credit card provider for a refund, you should contact the retailer you bought from first.