Fight Credit Debt With Credit Card Features

It can be easy to fall into a credit card debt, but settling a debt is only one part of the process to staying debt-free.

Whether you are just about to get a credit card, happily using one or struggling to make repayments, understanding credit card features such as interest rates, interest free days and annual fees can help you keep credit card debts at bay.

Interest Rates

Interest rates are one of the first things people consider when looking at credit cards. They can also play a big part in getting in and out of debt.

In order to get the best deal on a credit card, many people will sign up for cards with lower, variable interest rates. This means that the provider can change the interest rate, though usually it only happens when the Reserve Bank of Australia calls for a rate rise.

However, even if you have a competitive low interest rate credit card, like Bankwest’s Lite MasterCard, which has a 5.99% p.a. rate for new purchases, you should always check the rate on your statements to make sure there have not been any unexpected increases.

Having a good awareness of your interest rate, and how much interest you may be paying, will make it much easier to see when debt could become a problem, and easier to stay out of debt altogether.

Interest Free Days

How many days do you have to pay off what you put on your credit card? While some people may know the answer right away, the interest free days available on credit cards can easily be forgotten or pushed aside once your daily routine sets in.

A lot of credit cards will offer up to 44 or up to 55 interest free days, however some do offer less than this amount – usually if they have other competitive features like the Citibank Ready Credit, which has interest of 9.90% p.a. for balance transfers, cash advances and purchases, but zero interest free days.

Whatever the amount of days you have interest free, make sure you are aware of them so that you do not end up paying more than you planned.

Annual Fees

We all know that credit cards do not come free, but the focus tends to be more on meeting interest payments than on the annual fees that come with some cards.

Often these fees will be waived for the first year you have the credit card, but after that they can range from anywhere between $30 and $150. That could end up being more than you pay in interest for the year, so check the annual fees before signing up or making a switch.

No one likes to end up in debt, but it can be easy to forget that spending credit is different to spending your own money. Keeping an eye on credit card features, and statements will help you stay on track for the long haul.