Are you a slave to your credit card or is it your trusty servant? Here’s the Your Money Top 10 list of ways to make your plastic more fantastic.


1. Keep your credit limit low


The bank may offer you $20,000 but don’t feel obliged to keep up with Gina Rinehart. Think about why you need the card and how much you are likely to spend on it. Don’t accept a credit limit over that amount. The trap with accepting a higher limit is that if you then apply for a home loan your “affordability” will be measured not by how much you currently owe on credit cards but how big your credit limit is.


  1. Use interest-free days to full advantage


Some cards no longer offer the traditional 55-days interest-free period so check you have a card that does. Always endeavour to pay back the whole balance within the interest-free period, that way the only cost associated with your credit card should be the annual fee.


  1. Choose a low-rate card


If you think there’s ever the possibility that you could slip and end up paying interest, consider opting for a low-rate card. You can find cards with competitive rates that still offer reward programs but you have to be a big spender to make the benefits from a reward program worthwhile when compared with the interest paid over a year on a high-rate card.


  1. Choose a low annual fee


Unless you are a very big spender, consider whether you will really use all the benefits that come with high-fee cards. Do you really need a 24-hour concierge to book your flights and accommodation on a regular basis? How frequently do you really fly?


  1. Make that bling sing


If you spend over $20,000 a year ($1,700 a month) on your credit card, it may be worth considering a platinum or gold card. Just make sure you fully utilise all those benefits: 24/7 concierge, travel insurance, warranty extensions, purchase insurance and special perks like commission-free currency conversions and invitations to VIP events.


  1. Plan your cash in advance


Never use a credit card for a cash advance. You’ll be charged interest immediately and many cards have a highest rate for cash advances than other purchases. Plan ahead if you need cash and use your debit or ATM card instead.


  1. What’s the point?


Never spend more on your credit card for the sole purpose of earning rewards points. Rewards are simply the icing on the cake, stay disciplined so you don’t end up with a credit card debt.


  1. Everyday living


If you’re a big spender, go for it, put everything you can think of on your card, just remember to pay the whole outstanding balance within each statement period. If you are a “revolver”, someone who has an outstanding credit card balance and regularly pays interest try not to use the card to pay for everyday items.


  1. Transfer the balance


If you do have an outstanding balance that doesn’t ever seem to shrink, consider a balance transfer deal. Just make sure you can make high enough repayments to reduce the debt to zero as quickly as possible and don’t make new purchases on the card.


  1. Don’t be a plastic victim


If you do feel like you’re in over your head with credit card debt, take drastic action. Cut your card up, or at least freeze it in a glass of water until you get your spending habits under control. Help if available if your debt situation is out of control. You can talk to a financial counsellor from anywhere in Australia by phoning 1800 007 007.

- By Jackie Pearson