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After the festive season you may still be feeling the impact of using your credit card unwisely.

There is no doubt credit cards are convenient, but they are also addictive and in a very short time that nasty four-letter word, DEBT, can fast undo a budget.

A simple way of people making some savings and ensuring they really do have a good year in 2010 is to just be smart about how they access their money.

The following tips encourage healthy spending habits and should help people avoid a financial hangover:

  • One of the first tips for credit card debt management is not to have five cards. Look at combining your credit cards so you only have one or two. This means you won’t be paying several account keeping fees, transaction fees or interest across several cards.
  • Avoid cash advances from credit cards. Interest on these is usually charged straight away as opposed to having a waiting period.
  • Check the interest rate on cards and perhaps consider shopping around for a new card. A lot of credit card providers offer zero interest on balance transfers for the first few months if customers sign up for their card and move their existing debt over.
  • Think about using credit cards for everyday spending but be careful to make monthly payments before the due date. You’ll be able to reduce the number of transactions you make per month and avoid bank fees.
  • Don’t get into the habit of making minimum-only payments. Making only the minimum payment each month increases the amount of time it will take to pay off your debt. It also increases the amount of interest you end up paying. To pay your debts off quicker and cheaper, you should pay as much as you can on your balance each month.

Don’t use your credit card to buy things you can’t afford. Living a borrowed lifestyle is the quickest way to get into debt. If you can’t afford a purchase today, chances are you won’t be able to afford it tomorrow, or next month. People who are not going to be able to pay off their card before interest is charged really need to stop and think whether they really need the item they’re about to buy. You’ll have to pay for it eventually and that $50 purchase can very quickly cost you $60.

  • Make the most of your credit card’s rewards programme – people are better off using one particular credit card where possible to get better returns.
  • If you have an offset mortgage account, using a credit card sensibly can help make considerable savings on interest payments, with more money left in the account to pay off debt.
  • Always stay within 30% of your credit limit. A large part of your credit card rating depends on the amount of debt you have. Keeping your balances low helps you maintain a good credit score, not to mention being far easier to manage.

Any advice given is general only and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult an AMP Adviser to consider how appropriate the advice is to your objectives, financial situation and needs.