Credit cards.

2min read
Posted 10 April 22

When you take out a credit card, you're asking for permission to borrow a certain amount per month to be paid back over time. Your credit limit is the maximum of what you can borrow each month.

To get approval for a card, the credit lender you apply to will look at your repayment history, credit score and other information about your current financial situation. The limit of what they'll lend to you is a risk assessment of how much they trust you to repay a loan. 

 

A couple of things to note.

Credit card histories are closely monitored by credit reporters — which means non-payments can drop your credit score. So can overextending your credit limit or signing up for too many credit cards. 

You should also keep in mind that interest will be charged on your credit card if you don't pay your balance within the month. The amount of interest you pay will also depend on the type of card you take out (and the size of your credit limit). You may want to think about paying in cash or with a debit/Eftpos card.

Some cards will have an interest free period to entice people to take them out. Take full advantage of that if you can, but be aware that it isn't forever.

Last thing to note — if you're making a payment online, do it on a secure network. Public wifi is potentially risky, as your payment details can be easily traced.


 

Stop! Disclaimer!

Info and tools on the Yonda website are to be used as a guide only and do not constitute financial advice. Use Yonda as a starting point and then seek professional advice.