Is your wallet full of plastic? Most people rely heavily on their credit cards for much of their day-to-day spending. It's worth keeping in mind some simple rules.
Don't borrow more than you can repay: Credit cards have stubbornly high interest rates. Don't rack up more in purchases than you can repay each month. Do everything you can to avoid paying just the minimum - a credit card balance of $2000 repaid at the minimum rate at the major banks would take between 14 and 20 years to clear and cost at least double the original balance.
Don't have too many cards: If you're going to apply for credit soon, it's worth cancelling cards you don't need. Most banks assess your liabilities based on the credit card limits you have, not the balances you're carrying. Fewer cards makes you look like a better borrower. You'll also save annual fees.
Know your interest-free period: Most cards have a period of time they allow before purchases start attracting interest. Check how long this is.
Beware that if you have any balance left over from the previous month, this interest-free period probably won't apply.
Check your rewards: Rewards are a nice bonus, but only if it makes financial sense. Some cards require such a high annual fee that you'd have to be a big spender before you saw any return from the rewards they offered. Every six months or so, check what you've redeemed in rewards and what you've spent in fees. You might find a low-fee card is a better option.
Don't ignore your business cards: Because business debt is generally tax-deductible, some businesspeople tend to worry less about the balance they carry on their work credit cards. But credit card debt is expensive wherever it is, so get rid of it if you can.
- Jeremy Tauri is an associate at Plus Chartered Accountants.
- Image supplied by NZ Herald
By Jeremy Tauri
Phone: (09) 438 3322
Fax: 438 8455
134 Bank Street, Whangarei
If we had to sum up Brent and the team at Plus CA it would be - humorous, efficient, professional with a real focus on making your money work to its best ability for you...we will continue to deal with them even though we are moving overseas as we know they have our best interests at heart.
Jeremy thank you for your patience, assistance and general chit chat over the years. I would have absolutely no issue in recommending your services to everyone and anyone – in fact, I do.
We recently employed Jeremy Tauri of Plus Chartered Accountants and have been thrilled with the improved service we have received. Jeremy is really approachable and always available to answer queries. At his instigation we have set up quarterly meetings so that we are regularly reviewing our business and avoiding any ‘end of year surprises’.