Credit Card Worries: How Can I Build A Healthier Relationship with Mine?

credit card.png

So credit card interest has risen to its highest amount in over a decade. We saw the recent report from Moneyfacts and found it worrying to say the least. 

The study said that the average annual percentage rate (APR) reached 24.7% in September - a huge amount for any card-holder to pay back on top of the money they’ve actually spent. If you didn’t know about this (or were unaware of any changes your bank might have made to your own card plan), well you might think it should be the bank’s responsibility to educate you. We think so too. But that’s not always how it works… after all, they’re trying to make money out of you and your spending habits, not running a feminist finance education blog!

So let’s take this opportunity to review credit card best practice:

  1. Pay your bills on time! It’s so important not to let this, of all your monthly outgoings, slip, because the cost of falling behind can get out of hand scarily fast.

  2. Use your card wisely (for emergencies and important household stuff - not shoes) and consider giving yourself a monthly spending limit on it to make sure you stay in control.

  3. Pay your credit card bill in full every month if at all possible.

  4. If this month is a difficult one, try at the very least to meet the minimum payment; you will pay interest on the remaining balance and that can be substantial.

  5. If you’re really struggling to repay, call your bank without delay, and a debt charity too, to discuss your options. There are systems in place to help troubled debtors but you have to take the first step in telling them there’s a problem.

  6. Make sure notifications are set up on your account so you know where you stand at all times with what’s going in and out.

  7. Airmiles, cash-back and other rewards are tempting, but you’d be crazy to spend money on a card solely in order to obtain these benefits. You may never be able to use that companion voucher for a business class trip to New York but you will certainly have to repay the debt you incurred in earning it!

In short, credit cards do have their uses. And yes, one of those is as a way to build and boost your credit score, so it could help you get a mortgage to have some HEALTHY credit card spending going on. But the lure of apparently free money and the natural human instinct to get instant gratification because tomorrow may never come is getting many people in trouble with their credit cards. So do please take this kind of debt more seriously than any of your others and take action now to ensure you don’t find yourself in real trouble.