Dear Aunt Sue
Is it just plain bad to have a credit card? My mum constantly tells me I shouldn’t have one, but how can I buy a plane ticket or hire a car without one?
Dutiful daughter, Sorrento
Dear Dutiful Daughter
How lovely to find a daughter who does what her Mum tells her to do.
In your case though, Mum is partly right and partly wrong. Credit cards in today’s society are virtually a necessity because of the reasons you discuss, for one. If you want to transact online they are practically mandatory. Why Mum is worried though is that unless you use credit cards wisely you could find yourself with a very large debt WITH a very large interest charge per month if you do not pay the balance off ON TIME every single month. Some people even go so far as saving money in a bank account paying .5% interest (if they are lucky) and not paying off a credit card with an interest rate of 22.5%. They are going backwards every month. So if you are very careful and disciplined credit cards can be fantastic.
Just a couple of rules I gave my children with their first credit card.
Get one with a low credit limit until you get used to it (or forever if you can). That way even if you do get carried away you will be able to pay it off very quickly.
Don’t use it just to buy for buying sake. Think of what it is like now for you – if you want something you save for it. Use that same philosophy if you have a credit card. Make sure you look around at the different offers that credit card providers have to make sure you get the best one for you.
ALWAYS pay the balance off on the due date. Leave the credit card at home if you are going shopping. That way if you want something you will have time to “cool off” if you have to go home to get it and by that time you may decide not to buy it after all.
All little tips Dutiful Daughter – but try them and see how you go. That is, of course, if Mum says it is OK!!
Hope that helps.
So until next time girls and boys, as always keep those questions coming in by visiting our website https://www.moneynatters.com.au and using the “contact us” tab.
And finally just for you Dutiful Daughter “Money talks – Credit echoes”.
Have fun and keep smiling – Aunt Sue
