Credit is exactly that. It is like a short term loan from the bank that is pre-approved.
The interest is the way they ensure that they are not out of pocket if you don't pay them back.
I'd go a bank credit card, Leasha is right the store cards can be huge and the interst often starts from the time of purchase.
Have a look at the annual fee for the card, Many of the reward cards have a fee of up to about $300-$400 a year.
(That said I have a Westpac Altitude card and I use my reward points to pay the fee $300 each year)
To make it work. Never accept the upgrade of credit limit the banks will send, if you need more credit consider it then call the bank. ALWAYS pay the card off in full when you recieve the statement.
If under any circumstances you start to spend beyond your means cut up the card on the spot.
If you stick to this, the convienience of credit will work for you.
Yes, I agree with Mel, it helps to look at it like its a loan. You don't spend as much if you think "do I really need to get a loan in order to buy these jeans? Or can they wait until I can actually pay for them?" But we have recently needed to buy a washing machine on extremely short notice as ours just died unexpectantly and are grateful to have the credit card for that! But we don't use it for anything below $500 unless its an absolute emergency.
I aggree with Leasha (So much agreeing here)That is a great way to start.
I use mine for everything. This leaves my pay sitting against my home loan for as long as possible. I have a budget and I don't buy anything that is outside of that unless i've discussed it with my DH first and visa versa for him. That way we know exactly how much out credit card will be each month, and we know we can pay it off as it is all food and bills.
I found this website that compares the rates of credit cards. The one with the lowest interest rate was Aussie. Would that be a good thing? They aren't a bank as such.
If I were to apply for a card, would they send me one? Or would I be approved and then have to fill out more forms to get the card? I want to know if we qualify for a card or not. We are low income earners, we live comfortably with no current debt. DF is very hesitant, but he is the one who wants things we currently can't afford, and he is a terrible saver. I am trying hard to save but he's making it difficult. With a CC, perhaps we can get the things we need and pay bills more easily, and just keep paying back the CC to keep on top of the balance.
With interest free periods on purchases, is there say 50 days for each purchase? So if I bought a computer on the 12th of the month, and a freezer on the 20th, would the interest free period start from the first purchase?
Thanks for your help so far, this whole lot is so confusing!
Ausie is pretty good, YOu may need to have an account with them to get the cardnot shure.
The Interest free period starts from the day of purchase (for most cards.) Be really careful with paying each of on the 50 day mark. You can't tell the bank which purchase your paying off, so they will probably still charge you interest if you don't pay off the full amount on your statement regardless of when the last purchase was. Also the CC is in one persons name, that person is fully responsible for the card. If DF is a bad saver then don't give him a card.
So could I get a card when I only get Centrelink payments? DF could co-sign. I've heard you can get cards in two people's name, in a relationship?
Thanks for telling me of interest free periods. It does make sense that they would not know which purchase you are paying off, so best to go from the first one, until balance is back to 0 (nothing owing) and then a new interest free period starts from next purchase?
How do they really work? I know that you get a limit. Lets say $2000. If I only spend $450, do I have to pay back that $450 in the next month to beat the interest, or only when I reach the $2000 limit?
Yes, you have to pay back the total value owed each month or you get charged interest.
What is an APR?
Annual percentage rate - the higher this figure, the more interest you potentially pay on your purchases.
How does the interest work? If you pay the balance before the end of the month, you don't pay interest?
Most providers give you a statement, a total to pay, a minimum payment, and a date to make payment. If you pay off in full by the due date, no interest. Make less than the full amount but more than the minimum payment and you are charged interest - check your provider as some charge interest on the remaining balance but most on the full balance. The due date is usually towards the end of the month but could be the start of the month or the middle... check the provider.
How can you make it work so that you don't end up in debt?
Only spend on the card what you have in the bank already and ALWAYS pay off in full.
What are rewards cards like? Are banks better or other credit card providers?
Depends what you want. I have a card with low APR (very low - 7.9%) and 1% cashback. This is because we only pay off the full amount 90% of the time so low interest is important and 1% of all monies back every year is a nice little bonus! An extra 75 quid or so doesn't go amiss. I also get instant cashback deals which change every now and then, so using one particular chain of petrol stations means I get 3p a litre straight back credited to my card every time I buy petrol there! Some people prefer air-miles or vouchers for a high-street store, check what you want first. I'd always say cashback and a low APR but you may not.
If I were to apply for a card, would they send me one? Or would I be approved and then have to fill out more forms to get the card?
You have to be approved first: I tend to apply on-line to avoid waiting and delays. It's a very simple form about income only.
With interest free periods on purchases, is there say 50 days for each purchase? So if I bought a computer on the 12th of the month, and a freezer on the 20th, would the interest free period start from the first purchase?
It's a potential interest free period: basically your statement starts on the 1st of the month and payment is due on the 25th of the next month (for example). So if you buy something on the first of the month, you pay no interest until the 25th of the next month (up to 56 days interest free in a 31-day month). If you pay in full, no interest. If you pay part of the balance, interest is charged. If you buy something on the 11th, you have only 46 days interest free. Watch out for the sneaky "up to" statements! Pay off the balance in full every month.
So could I get a card when I only get Centrelink payments? DF could co-sign. I've heard you can get cards in two people's name, in a relationship?
Depends on the creditor if they'll give you a card or not, you may need to apply to a few different places. Each application gives you a credit score though - a high score means you'll find it harder to get credit. Find out first if the creditor will give a card to a centrelink payment person before you apply. You can get cards based on a couple, we've been offered them before, but usually it's one person is the main person and responsible and the other just has access to the credit. Not good if your DF is impulsive and not good at saving. You can maybe get two cards as a couple but keep DF's in the freezer trapped in a litre of water's worth of ice - by the time it has thawed out of a block of ice he may not want to make the purchase any more! I've heard that works sometimes for impulse buyers.
Reply With Quote
But we have recently needed to buy a washing machine on extremely short notice as ours just died unexpectantly and are grateful to have the credit card for that! But we don't use it for anything below $500 unless its an absolute emergency.
Bookmarks