Credit Cards: The Good, the Bad and the Ugly

Credit Cards can be a real problem – but they don’t need to be…

Our Use of Credit Cards – The Good, the Bad & the Ugly

Credit Cards have created a level of convenience in our lives and we can no longer comprehend not having access to one.

However, with this convenience has also come a different set of habits that for some, if left unmonitored can be a financial disaster.

Over the past 15 years the level of credit card debt accruing interest has increased from $6,522M to $32,458M (source:, RBA).

Most credit cards start to accrue interest between 15–30 days after the end of the credit card statement, so the maximum amount of interest free spending that you can have would be for 55 days on most credit cards.

Credit card debt can affect many of us negatively– however there are various levels of problems that they create. A good way to evaluate your credit card dependence is by using the below chart to rate your dependence;

For many people there are various levels of dependence between these categories, however this tool is a great way to gain some clarity on your spending habits.

If you have found yourself in the ‘Good’ category – then keep doing what you are doing.

If you have found that you fall into the ‘Ugly’ category – then you may have some work to do. There is no better time to identify your bad habits (and start breaking them) than right now!

Here are some tips that will kick start the process;

Refinance and Consolidate
Refinance/consolidate your credit cards (can be 20% interest on outstanding balances compared with 4% on home loan or 11% on personal loan). This includes reducing the limit on your credit card the amount of credit cards you have to one.

 Remove the temptation
Take your credit card out of your wallet and aim to use it only for decision based purchases or emergency use. Don’t get sucked into ‘FOMO’ (fear of missing out!).

Cut It Up
If point two isn’t an option, then a more alternative/last resort option is to remove the urge to use your card completely (scissors at the ready!).

Budget Budget Budget
By creating a manageable budget, it will allow you to control your normal everyday expenditures (incoming and outgoing). Set up different savings/bank accounts to be able to cope with your more regular outgoings such as rent/insurances/car registration etc., and have direct debits arranged for these to be paid on a monthly basis from this account. It is a good idea to arrange for your salary/wage direct debited into this account too.

Regular loan repayments should be managed from your chosen savings/bank account as well. “Lumpy” expenses are what we often get into trouble with, so try to predict as many of these as you can – and even factor in any ‘unknowns’ into your budget as best as you can.

Stay Focused and Trust the Process
Set yourself a realistic target and don’t forget to reward yourself in small ways along the way. You can still enjoy life while budgeting and managing your finances, however you may need to modify your priorities and lifestyle if you are recovering from a damaged financial situation.


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Watch this info video: TAG Wealth Tips – Credit Cards, Taming the Beast
In this short video, Michelle Griffiths gives you some strategies to keep your credit card under control.



Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686).