ANZ wants to help customers manage their finances responsibly. With interest rates having increased twice this year, it is worth customers making sure their credit cards are not costing more than they need to. The following are some tips to help save money on credit cards.

Manage Your Credit Card Responsibly and Save Money

1) If you cant afford it – don't buy it

Only charge items to your card or withdraw cash if you know you can afford to pay off your balance within a realistic time frame, and be aware that most credit cards charge additional fees and higher interest for late payments.

Consider carefully any offers to increase your credit card limit. Do you really need more credit? Will you be able to manage it? Don't just accept it because your bank offered it to you. You are the best judge of whether you really need the additional credit limit and more importantly, whether you can afford to repay it. Think about decreasing your credit limit if you have more credit than you really need (or can afford). This can reduce the opportunity for unnecessary spending and may help keep your card under control.

2) Avoid paying unnecessary fees

Most banks charge an annual fee for their credit cards, so it's worth limiting the number of credit cards you have. Fewer cards mean fewer annual fees and fewer interest rates to keep track of.

Credit cards that offer reward programs may charge an annual fee for the program. It's worth finding out what the fee is and weighing up the benefits of the rewards compared to the fee you pay to receive them.

Make monthly repayments on time and don’t exceed your credit limit, to avoid additional fees. Types of fees that may be charged are late payment and overlimit fees. Talk to your bank or financial institution for more information on these types of fees.

We recommend that you monitor your own available credit and purchases to ensure that you stay below your agreed credit limit and make monthly payments on time.

If possible, avoid using your credit card to withdraw cash. Most banks charge a fee for each cash advance in addition to any higher interest rate that cash advances might incur. In addition, the interest free period for most credit cards will not apply to a cash advance. Instead, interest will be charged from the date you receive the cash.

3) Avoid interest payments altogether

If you have a credit card that offers interest free days, you can avoid paying interest on your purchases if you always pay off the closing balance on your card in full, by the due date on your statement.

4) Minimise interest charges

Always pay at least the minimum repayment by the due date. Better still, if possible, pay more than the minimum – the more you pay, the faster you can reduce your credit card debt and the less interest you will pay.

5) Manage your debt sensibly

Talk to your bank or financial institution if you get into trouble paying off your credit card and see whether you can organise a payment schedule that works for you.

6) Don't use your credit card for long-term borrowing

Many people have multiple debts such as credit card, hire purchase, car loan and housing loan. If this is the case, you may be paying more interest than you need to. Credit cards are not a cost effective way of funding long term borrowing. Speak to your lender about consolidating your debts under one umbrella credit product like your housing loan. So, instead of paying a higher rate of interest on your credit card, you’ll pay at the home loan rate which is often much lower. Then you can put the savings directly into your home loan!

7) Make the most of your interest-free period

Many credit cards offer an interest-free period. The number of interest-free days in this period varies from card to card, but can be up to 44 or even 55 days. If your statement period runs from 1 January to 31 January, you will receive more interest-free days if you purchase goods early in the month, whereas fewer interest-free days will be left if you make your purchase at the end of the month as it is already coming to the end of your statement period.

In order to avoid paying interest on your purchases by utilising the interest-free days, you must pay off the closing balance on your card in full by the due date on your statement (the closing balance will be shown on your statement).

8) Choose the right sort of card to suit your needs and spending habits

Choose a credit card that is right for you. If you plan to pay off your balance each month, interest rates may not be much of a concern. If you have a card with an interest-free period and you pay your card off in full each month, you will be paying off your purchases before they incur any interest charges. As a result, you might want to concentrate on things like fees, and the rewards you might be eligible for.

If you don't think you'll pay off your card in full every month, and you are comfortable with having an ongoing balance on your credit card, then it is likely that you will pay a certain amount of interest with each repayment. In this case, you will probably want to look at a card with an attractive rate of interest, rather than a rewards program. Even if you do plan to keep a balance on your card, consider trying to pay off more than the minimum payment each month – it will reduce your debt faster and will save you interest in the long run.

9) Shop around and compare cards

Different banks and financial institutions offer different types of cards, so it’s important to shop around to find the card that best meets your needs, and provides good value for money. When visiting banks and asking about the cards they offer, try asking the following questions to help you weigh up the pros and cons of each card:

• What's the rate of interest?
• How long is the interest-free period (if any)?
• Is interest charged from the date of purchase or from when the statement is issued?
• How much of the balance do you have to pay back by the due date?
• What are the fees and charges associated with this card?
• If I have any other accounts with this bank, do I get any fee rebates on my credit card?
• How widely is this card accepted (i.e. within Australia and around the world)?
• What charges will I incur using the card overseas and what exchange rate will be used?
• Is there a reward scheme, and if so, what rewards are offered and what is the cost of the rewards program?
• Do I have any protection if goods or services I've paid for using this card are defective?
• Does the card offer any other benefits that are relevant to me? Remember, you pay for benefits by way of the annual or reward fee so only take out a card where you will use these special benefits.
• Do you require additional cards on the account? Consider the fees involved.

10) Make the most of rewards

Credit card providers offer a range of incentives and rewards and its worth thinking about how best to choose between them. You should be aware that there is often a cost associated with a reward scheme by way of a higher interest rate or higher fees. If you think you will have an ongoing balance on your card, don’t accept a higher interest rate just because you want the rewards. The value of the rewards is unlikely to be more than the increased interest cost.

If however, you are confident that you will be able to pay off your balance each month, you should shop around for a card offering the rewards you want, like flights, theatre tickets, cash back or store vouchers. Paying for a flight on rewards can significantly reduce the cost of a holiday!