Here are some classic credit card fails – how many apply to you?

• Having too many credit cards
• Only making minimum repayments
• Not paying your bill on time
• Exceeding your credit limit
• Buying things you don’t need
• Not understanding what the “introductory rate” means
• Not reading the fine print

The average Aussie owes more than $4000 on their credit card. That’s a lot of shoes.  

Scarily, if you only pay back the minimum payment each month (around 2%), it will take 31 years to pay off the debt – and you’ll pay nearly $15,000 in interest. Now, that would buy a LOT of shoes.

Happily, there is a way to avoid the debt trap.

Simply by ramping up the repayments each month, you’ll pay off the debt quicker and save potentially thousands in interest. It seems like a no brainer.

Before you find yourself burdened by debt, learn how to use your credit cards safely, so you can avoid falling into the credit card debt trap.

So, how do I use my credit card?

First things first. Before you sign your life away, do a budget. You can use this handy calculator from Money Smart to find out how much the monthly repayments on your credit cards will cost.  

If you don’t have enough cash flow to cover the repayments, consider a no-interest loan or a debit card instead.  If you need help with your budget, you might need to chat with a financial planner. You can find one here.

Then, shop around for the best deals. If the credit card has a great introductory rate, find out what the standard rate is after the introductory period is over.  It might come as a bit of a shock.

When you’re shopping around for a credit card, be sure to compare fees and extra features,  as well as interest rates.

Here are some other great tips to help you manage your credit card:

• Pay your credit card on time to avoid late fees or extra interest;
• Make sure you always know how much you owe on your credit card;
• Pay more than the minimum each month to pay the card off quickly and save on interest payments;
• Set up a direct debit to pay a fixed amount each payday;
• Avoid cash advances – they have very high interest rates;
• Use a calculator to find out how to fast track paying off your debt.