The 5 rules to help you save on credit card expenses

Published on November 27th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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There are various ways that we all try to save a couple of dollars here and there, but somewhere along the line we end up falling off the saving bandwagon making us lose sight of the goal we initially started off with. 85% of Australians end up breaking their financial resolutions to save due to various reasons. Managing our finances is tough act to follow, but with these five saving rules you can improve on your chances of saving.

Set up a target

Having no set target is similar to taking a trip with no destination. You could wind up going in circles and always ending back at square one. Before you open an account or already calculate how much you are willing to subtract from your hard-earned cash you need to ask yourself what you are setting the target up for? Questions such as what you are going to use the money for once you have reached your target will give you the needed drive to obtain your goals. ASIC revealed interesting data which revealed that 17% of Australians stopped saving because the target was unattainable. When you set up a target you need to make it something that is attainable and within your financial reach.

Set your own credit limit

When you take out a credit card it usually comes with a limit that you cannot exceed. Although you have access to a certain amount on your credit card doesn’t mean that you have to swipe until you almost reach that set amount. For example, if you are given access to 80% of your credit card before you reach your credit card limit set another limit where you only use 30 or 50% of it. It is good to keep in mind that your credit card comes with interest, and if you fail to meet the repayments because you exceed your limit you will pay more.

Is your card the right card for you?

Credit card debt in Australia is a crisis that continues to rise, and unfortunately with various offers screaming for our attention to clear debt we fall for the wrong card that digs us deeper into debt. A sure-fire way to ward off credit card expenses is to constantly be informing yourself of its features and interest rate that you are paying. A one percent difference in interest rate can send some credit cards out of the affordable zone into something that is unaffordable. Your power lies in comparing credit cards and finding the best competitive value for your money.

Balance your expenses with a balance transfer card

Some Australians find themselves in the red due to unexpected expenses or changes in their financial situation. This has caused 41% of Australians to end up breaking their financial resolutions to save. When placed under pressure you can end up placing large purchases on your credit card which can cause you to foot a hefty bill at the end of the month. Balance transfer cards are now flooding the market to help Australians deal with debt by consolidating it with a card that has a low interest rate. However, if you decide to use a balance transfer card you will have to check its fees and features to see if it is something that you can manage and work with.

Delayed gratification

Avoid the urge of whipping out your credit card to pay for expenses that you don’t really need by setting up a system that works for you. An example is the 30-day rule that can stop you from buying flashy items that you will regret buying later. You write down an item or items which you think of getting, but instead of going out to get it you must wait for thirty days.

Once the thirty days have passed you review these items and see if you still need them. Other people choose to open a savings account and deposit the price of the item they wanted to buy into the savings account which delays gratification.

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

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