credit card Archives - Credit Simple

Why you should aim to be a ‘deadbeat’ – at least when it comes to your credit card

Credit Simple — Fri, 24 Jan 2020 05:06:19 +0000

Are you a deadbeat? When it comes to credit cards, that’s actually a good thing.

Yep, a ‘deadbeat’ is a term for someone who pays off their credit card in full and on time every month. Why a deadbeat? Well, if you pay off your card each month, the credit card company doesn’t charge you interest – so they won’t make any money off you. (Credit card companies also use the much more polite terms ‘non-revolver’ and ‘transactor’.)

A whopping two million Aussies fail to pay off their credit card balances each month, amounting to $7b in interest each year. And according to RBA statistics, a huge $32b was accruing interest on credit cards in January 2017 – that’s one month alone, and an average of $4,200 per card holder!

So if you’re not a credit card ‘deadbeat’ and you’re one of the many Aussies who owes money on a credit card, it’s a good idea to clear the debt as soon as possible. There are a couple of strategies many people opt for – such as a balance transfer, which means you switch your existing debt to a new credit card company and usually enjoy a 0% interest rate for a period of time. Or you can consolidate your debt into a lower interest personal loan and pay it off more easily.

“There are lots of reasons for people’s credit card behaviour, whether they pay it off in full each month or they carry a balance,” says CreditSimple.com.au spokesperson Emily Price. “Some ‘transactors’ like to use credit cards for their everyday spending so they can get the most out of rewards programmes and get extra treats. And some people simply don’t budget and end up using credit cards to get by.

“Whatever your situation and strategy, the best thing to do is pay off your credit card in full and on time each month, and try to see a credit card as a tool of convenience rather than an avenue for long-term borrowing.”

CreditSimple.com.au spokesperson Emily Price has provided her top tips that can help more Aussies earn the coveted deadbeat status.

1. Balance transfers

“Balance transfer credit cards, where one bank pays off any outstanding debt from a previous bank at a lower interest rate, can be a good option for some people,” Emily says. “Remember these offers usually only exist for an introductory period, so make sure you make the repayments while the low interest rate is still in place.”

2. Consolidate, consolidate, consolidate

“Consider consolidating individual debts into one low interest personal loan to make payments simpler to manage and minimise interest fees.”

3. The order is key

“Lay out a clear repayment plan, especially if you have multiple debts. As a rule of thumb, it is usually best to pay off debts with the highest interest rate first and you should look to wipe out your debts one at a time – even if that means starting with the smallest. Consider working with a financial counsellor or adviser who can help you consolidate your debts and work out the best repayment plan for you.”

4. Lower your credit card limit

“Measures like reducing your credit card limit, reducing the number of cards you have, or using a debit card can help to prevent overspending. If you do need to spend on your card, remember to make repayments on time to avoid negatively affecting your credit history.”

5. Create a budget

“This may seem like an obvious tip but creating a budget can help you identify any unnecessary spending or areas that could be cut back. Remember that it can take a little time to wipe debt, but you’ll be in the black much faster if you maximise your credit card repayment each month.”

Being a deadbeat (*cough*, sorry, ‘transactor’) has never looked better.

The post Why you should aim to be a ‘deadbeat’ – at least when it comes to your credit card appeared first on Credit Simple.

The right way to apply for a credit card

Credit Simple — Wed, 22 May 2019 02:23:29 +0000

If you’ve thought long and hard about your need to get a credit card, and have narrowed down your options after an exhaustive comparison of rates, fees and perks, then the next step in the process of getting a credit card is to actually apply for one.

Nowadays, most card providers let you do all this online, but applying for a credit card isn’t as easy as ticking a box. It can be a bit of a process, involving photo IDs, payslips, declaring your assets and so on.

Credit card companies have to take care when assessing your credit card application, as they need to make sure they’re giving the right card to the right person. So you can expect to have to do the following things when applying for a credit card.

You need to meet the eligibility requirements

As a general rule, successful credit card applicants need to be at least 18 years old and be either a citizen or a permanent resident of Australia, although there are a (limited) number of institutions that offer credit cards to temporary residents.

Credit Card issuers also have obligations that mean they need to lend responsibly So you will need to prove your capacity to handle the credit card based on owing the maximum limited, also show evidence of your income. It is likely that the credit card issuer will also undertake a credit check credit score requirements.

Depending on the card and the provider, you might need to be earning over a certain threshold per year and have a credit score above a certain number. People who have a lower income and/or have a poor credit score may struggle to be approved for some credit cards, particularly high-end rewards and premium credit cards, but it depends on who the card belongs to.

You need to provide personal details

At this point it’s time to open up and share some personal information. No, you don’t need to tell them your deepest fears or hopes and dreams, just some basic details about yourself, mainly:

Your full name and date of birth
Your residential address, and any previous residential addresses (as well as how long you’ve lived there)
Contact details
The number of dependents you have
Your employment information and your occupation (are you self-employed? retired?)
Your income

They will normally ask you to provide ID, so make sure you’ve got a photo of your driver’s license/passport or a copy of your birth certificate or Medicare card on standby.

You need to show proof of income

Often just stating your income isn’t enough. Credit card application forms will likely ask for proof of income, which is usually the following:

Full-time or part time employees need some of their most recent payslips (often two), or bank statements showing your most recent salary deposits
New employees can show newly signed employment contracts
Self-employed people must show their most recent tax returns
Pensioners must show a statement from Centrelink confirming their entitlements, or their most recent bank statements showing government income credits
Retirees must show their most recent bank statements or annual investment statements
Those with other income types need to show things like signed tenant leases, bank statements of rental credits, deposit certificates, personal tax returns etc.

When applying online, they usually give you the chance to drop an attachment in, and even authorise your bank statements so that there is no paper involved.

You need to enter your financial information

Credit card providers need to consider your whole financial situation, not just your income. After all, someone with a high income can still lose money each week if they spend too much money at the pokies or have massive debts. It’s all about do you have enough income that is available to handle the debt.

So don’t be surprised when you’re asked for a detailed list of your financial assets (savings, shares, valuable items you own) and liabilities (car loans, mortgages, other credit cards etc.). You may also have to give them an estimated monthly expense list, including major payments like rent, groceries, mortgage repayments, transport costs and so on.

Take some time to sit down and go through your bank statements to get all of this information together – this will make everything much easier.

It’s also a good idea to get your saving under control before you apply. Doing this will increase the chances of being approved.

What not to do when applying for a credit card

One of the worst things you can do is lie, or just be inaccurate, on your credit card application. Failing to tell the bank about a large outstanding loan or a huge debt from other credit cards could lead to your application being rejected. Worse, if you’re somehow approved, and the bank finds out you lied later on, you could get done for credit fraud.

If you get rejected once, don’t go around applying for dozens of other credit cards immediately after. Each application goes on your credit score, and too many applications in a short space of time leaves will lower your overall credit score. And the lower the score, the harder you’ll find it to get approved.

But above all, don’t apply for a credit card that’s above your means. Look for one with a suitable credit limit, interest rate and fee structure – you don’t want to rack up credit card debt too easily.

The post The right way to apply for a credit card appeared first on Credit Simple.

Credit cards: What a basic starter credit card will do for you

Credit Simple — Tue, 21 Aug 2018 03:15:39 +0000

Can this card help me build my credit?

Your first credit card is your chance to start proving you’re a reliable person to lend to. It’s your chance to show that you can pay what you owe, when you owe it. The more you can be trusted to do it, the better your credit rating will be. Build a good reputation with the card issuer, and that sets you up for them to consider you for some of their other offers and services.

So the cheapest card with the least frills is a great place to start building your credit rating.

Ideally, you’ll start with as little risk as possible, with the least temptation for you to borrow any more than you can manage to repay. Staying on top of everything gives you the best prospect of building your reputation for being reliable and creditworthy.

Pay your credit card bill in full and on time each month, and two good things may happen:

your payments will be reported to the credit agencies
you won’t have to pay interest

So the trick is to spend only what you know you’ll be able to pay in full and stay focused on spending within your means.

How much does it cost to open an account, including the annual fee?

There are plenty of starter cards offering a basic service for a basic cost so you should expect to get a first card that doesn’t charge an annual fee and offers a low interest rate.

So what you’ll be looking for is the lowest interest rate, no annual fees, and reasonable credit limits.

You might also want to look at a store credit card. That can be a good way to get your first card because the stores are quite ready to approve an application and get another customer spending more money in their shops. It’ll come with fewer benefits and lower spending limits but it can be a good way to use a card responsibly and build up your credit reputation.

Can I graduate to a better card later on?

This first card could be the start of an ongoing relationship with the card issuer. That means if you steadily build up a good record of payment, you could expect them in a while to offer you other cards with more features.

That’s a better option than shuffling from one card offer to another on the open market. Why? Because whenever you apply for a new card, the issuer will check your credit and that can take some points off your score. And if you make a whole bunch of applications, you might really have an effect on your credit score because that can give the impression that you could be having financial trouble.

Does it have automatic credit limit increases?

Many credit card companies will increase your credit limit automatically, if you show that you’re a responsible credit card user, and use the card enough to warrant a higher limit, so you might want to check that they do that.

The most important thing though is, it’s not which starter credit card that matters as much as what you do with it that really counts.

That means:

Always pay your bill on time. If you think you won’t remember, maybe set up automatic monthly payments from a bank account to make sure it happens.

Pay the balance in full. Any part of the balance that isn’t paid will cost you interest and that can mount your debt up quickly.

Spend only what you can afford to pay at the time of purchase. That way you’ll know there should be enough there when it comes in to pay you monthly account in full.

Be sure to read all your statements.

Don’t get a cash advance. They can be very expensive and can trigger high interest rates and can be a real headache.

And keep a watch on your credit score, right here at Credit Simple.

The post Credit cards: What a basic starter credit card will do for you appeared first on Credit Simple.

Can you get a credit card if you don’t have a clear score?

Credit Simple — Sun, 05 Aug 2018 19:48:53 +0000

If you have a bad credit history or don’t have a clear score, you may be wondering if you can still be approved for a credit card. But how can you achieve a clear score and be sure you’ll get the green light?

Getting approved for a card with a low credit score

The good news is that credit card companies are often willing to approve your application when you are trying to get a credit card with bad credit. Although you may not have the best track record with credit cards, a credit score is calculated using many different financial factors, not just credit card debt. It’s possible to achieve a clear score with some effort.

There are several ways to find offers, such as using our own Credit Simple website to view your credit score and current credit card offers for you.

What are my low score credit card options?

Store credits cards can be a good option if you have a low credit score. These cards are linked to a business, and there can be a lot of benefits that come with these cards, like store discounts. These are fairly easy to be approved for, and often there are no annual fees.

What are the risks with low score credit cards?

There are risks to keep in mind when applying for more credit when you have a bad credit score. If you apply for too many credit cards, this can lower your credit score even more. Keep this in mind and try to limit the number of credit card applications you’re submitting.

Also be sure that you can actually repay what you’re borrowing. It can be detrimental to your overall financial situation to get a new credit card that you won’t be able to stay on top of. Always borrow what you can actually pay off in the very near future.

And watch out for hidden fees. Many cards have an annual fee, and your interest-free period will eventually expire. It’s usually more expensive for you to use a credit card than a debit card, unless there is no interest and no annual fee, so keep that in mind. Make sure that you’re always reading all of the terms and disclosures before applying.

So, can you get a credit card with bad credit? Most likely. If you’re still not sure where to start, Credit Simple has tons of resources to help you get a clear score and keep it clean. Click here to check your credit score and credit report, and learn about current credit card offers for your credit score level.

The post Can you get a credit card if you don’t have a clear score? appeared first on Credit Simple.