Credit cards make spending
easy. But credit card limits
are often so high that
you are tempted to keep
spending without realising
the consequences. Always
remember: your credit card
represents cash that you have
not earned yet. Follow these
golden rules to ensure you don 't
get into uncontrollable debt.
Do a simple calculation: if
what you owe (monthly)is more
than you can afford to repay
(monthly),you are living beyond
your means and should cut back
on spending.
Always try to pay back the
full amount due each month.
The minimum repayment is only
the interest you must pay on
the debt you have built up. If
you repay only the minimum,
you will never get rid of your
debt, and you 'll continue to pay
interest at a high rate.
Don 't have more than one
card. If credit is available it 's
always tempting to use it.
If you are struggling to
manage your credit card
responsibly, pay off the debt and
ask the bank to reduce the limit (for instance, to R1 000).
If it is a big problem, rather
borrow money at a lower
interest rate somewhere else
to pay off the credit card. Then
make sure you use your card for
emergencies only.
Don 't use your credit card
to ‘borrow ' money
(a cash advance).The interest
is extremely high.
Never use your budget
facility unless you know
what it entails. The name
is misleading: it amounts to
everything but budgeting. The
interest is high and you could
end up paying double the price
for something (because of the
interest)than you would have if
you 'd paid cash.
Once the management of
your card is under control,
pay an amount into the account
each month and use that when
you need to shop and don 't
want to take cash with you.
Your card will then really be a
credit card – not a debt card.
A big plus of having a
positive balance in your credit
card is that the bank will pay
you interest.