Home Budgeting

Credit Cards

If your credit cards are currently out of control READ THIS CAREFULLY. You will be going backwards for years to come until you clear your credit card debt. I cannot stress this enough. Remember the interest rate on credit cards is sometimes triple your average mortgage. If this is you, it is time to consolidate your debt. What about store cards, GE Creditline? It's too much, so please listen to me. No, I'm not a financial advisor, I don't work for a bank, but I am a parent succeeding financially and juggling a job, kids and mortgage and yes, a credit card. I can help you to get on top here and help get your family back on track.

If you don't believe me let me hit you with the numbers. In January 2007, the average amount owing on a credit card in Australia was $2 877. If you only paid off the minimum amount every month it would take nearly 8 years to pay this off and would cost you $5 600 IN INTEREST, assuming an interest rate of 16.5%. How does this compare with your credit card situation? Please stick with me and read on.

If you're stuck with this mountain of credit card / charge card debt, it's time to consolidate. This means you need to take to your cards with a pair of scissors, now. Consider a loan product instead, until you get back on your feet. Consolidating your debt is something that ANY financial advisor will suggest if you have a mountain of credit card debt.

This product has an interest rate probably around HALF of what your probably paying. By the way, I was serious about the scissors. Cut your cards up NOW! Otherwise, if you think you're really disciplined, put the cards away somewhere. But trust me, this won't work if you can't control your credit card debt and you'll never get in front.

Bookmark our site (Ctrl + D) for future reference and come back to this section on credit cards when you've paid off your debt consolidation loan. That way we can get your credit cards working for you rather than against you. Meanwhile, there are plenty of other ways to save some cash so have a browse on our site.

If you consolidate your credit card debt with a product such as a debt consolidation loan, you're going to need some serious discipline to get back in front. But the minute you sign up for the loan AND cancel your credit cards you're in front and you should congratulate yourself for being brave enough to make the change as it's so easy to get stuck in a rut.

You can look at credit cards in two ways. Either you can manage it or you can't and we all know which category we fit into here. The way I use a credit card is this. It gets used for BILLS! All of my BILL MONEY then sits on my mortgage offset account until the credit card is due for payment. It then get's BPay'd straight off the offset account. I never pay interest on the card as I always pay it on time. This way I GET AN INTEREST FREE LOAN from my credit card company, in fact doing it this way, saves me money. Here's how. Let's say your bill money sits on a mortgage offset account and you have $1 500 sitting in there waiting to pay for bills. You pay $1 000 worth of bills on your credit card but the $1 000 cash sits on your offset account for the next month or so SAVING YOU INTEREST ON YOUR HOME LOAN!!! You pay your credit card on the due date by BPay, you still have $500+ sitting on the account that reduces the interest you pay on your mortgage EVERY SINGLE DAY.

So your credit card company basically just gave you an interest free loan which helped to reduce the amount of interest you pay on your home loan!! Finally, you've got one up on the banks.

If you don't have a mortgage offset account, then you should consider a high interest account with no fees. ING and Commonwealth Bank have these accounts available with a good interest rate. They're both around the 7% mark. But shop around and try to keep your fees to a minimum.

Open the account in the name of the person who earns the least amount of money. This way you will most likely pay less tax on the interest you earn.

If your credit cards are out of control and you took the step to cancel your cards, then you can still use the high interest account for your BILL MONEY. You can also use a high interest account for your bill money if you have a fixed rate loan that does not allow you to make extra repayments and / or if you don't have a mortgage offset account. Just pay cash for your bills or BPay over the phone or internet. From your pay, transfer the Bill Money straight into the high interest account so it builds up earning you interest. To pay bills either BPay straight from the high interest account if you can, or transfer the money back to the transaction account to pay for the bill, again by BPay over the phone or on the 'net...it's really easy.