Everyday credit use.

2min read
Posted 10 April 22

With your credit card, you may have a goal or two in mind, based on things you want to buy over time or with an immediate, one off-purchase. And for every goal you have, they'll be credit providers who'll deal with you. Some will focus solely on short-term or instant loans, and others take a more comprehensive approach. It's up to you to research these options and choose one that fits within your ability to repay.

Say you see a new pair of shoes for $500. If you can't afford the shoes with your current savings, you could find a provider willing to lend you money on your card. You'll be allowed to borrow up to a set credit limit and repay anything you borrow over a certain amount of time, usually once a month. Interest is also added if your repayment extends beyond a month, making the total more than the original $500.

Good credit use.

Because you're adding interest on your payments, borrowing on a credit card will mean more risk. A good rule of thumb is to use a different credit, debit or Eftpos card for everyday purchases you can afford to meet, and only make specific payments on your borrowing credit card for things you need. This helps you keep track of your repayments, so you don't miss any and keeps your credit utilisation low, building on your credit score.

So, next time you're at the supermarket or mall, think about what card you need for your payments. Can this purchase go on a debit card, or is it better on credit?


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.