How to be smart with your credit card

Australians are getting smarter with their credit cards. Aussies are now less likely to be racking up big debts on big purchases and paying big big interest on their credit card repayments. Aussie credit card holders are now recognising how useful a good credit card can be for shopping, easy transactions and for building up rewards points and even free flights. 

Increasingly they are doing all this without racking up unsustainable debt and paying high interest rates on their debts. And the average Aussie credit card user who does have a debt on their card is paying it down fairly rapidly.


“The latest Reserve Bank of Australia data on credit cards shows consumers are continuing to use their credit cards more as a payment tool, rather than a credit instrument,” said Angus Luffman, Veda’s General Manager of Consumer Risk. Veda is Australia’s largest credit reference agency.

Mr Luffman said the average credit card transaction size is falling and is back to levels not seen since 2004. That indicates credit card users are using their cards for everyday spending.


“The average value of credit card repayments continues to exceed the average value of transactions by an ever-widening margin,” said Angus Luffman. That means Australians are repaying their credit card balances. And the new data indicates that Australians are very cautious about taking on more debt said Mr Luffman.


Advantages of a credit card

 If you can repay your credit card within the interest free days, you have a powerful, and largely free, payment and budgeting tool in your hands that can:


Earn rewards, like free flights, vouchers, and cash back for you at virtually no cost

Help you ‘smooth’ your cash flow and income. Spend next week’s income now and repay later.

Build you credit rating by using your credit card wisely and never missing a repayment.

Complimentary insurances. Many credit cards come with travel and other insurance.

Fraud protection. You can get repaid if a transaction was not authorised.


How to use your credit card wisely

To maximise the benefits of your credit card, without getting caught in a spiral of debt and interest, follow these simple tips:


Choose the right credit card for your own needs. Browse credit cards from all the major financial institutions and decide which one meets your own unique needs.

Repay your credit card purchases quickly and within the interest-free days provided. Most card offer up to 55 days interest-free.

If you have a credit card debt, focus on repaying it before adding more spending to it.

Consider a balance transfer credit card deal for hard to repay debts.


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