Everyone loves to have a little credit that’s easily accessible when it’s required, and that’s the reason so many New Zealanders wallets are filled with them. We love to spend and we struggle to save, and that’s because society has shown us all the things that we could, should or at least desire to have.

What society didn’t cater to, however, was all the ways in which you can save your money, invest it and not spend it, except in recent years where it’s become more prevalent to save, so now as humans what do we do once all our earnings are invested? We spend with credit!

When it comes to spending, we insist on swiping our credit cards at every whim! A recent statistic showed that New Zealand had around $6.7 billion outstanding debt on credit cards, and that number is climbing year on year.

We’re not saying that credit isn’t a good thing or at least a necessary thing if controlled and utilised properly. The issue arises when people aren’t educated in all the transaction fees that seem minor, but essentially all add up when you’re repeatedly making mistakes with your credit card. Mistakes you could avoid!

Have a look at the following mistakes you could be making and quickly readjust the way you manage your credit!

Mistake #1 Carrying a balance

Carrying a balance can really cost you if you repeatedly have a large balance from month to month. Be mindful of interest-free periods and make an effort to settle your balances within these periods. It’ll save you unnecessary losses. You’re looking at an interest rate of around 20% per annum if you don’t!

Mistake #2 Only covering the minimum repayments

A minimum payment is just that, you cannot pay less than that amount monthly. However, to only meet the minimum repayment means that you end paying so much interest over and above the cost of the actual item you used your credit card to buy in the first place, and furthermore, it takes you forever to pay it off due to mostly just covering the interest charges each month.

Each lender will calculate their own minimum amount for credit repayments. They’ll range from 2% to 5%, depending on who your credit card account is with.

Mistake #3 Late payments

Make sure the date that your credit card repayment is due, is after your income reaches your bank account. That way you can schedule a debit order to go off as soon as your money comes in, thus sparing you the chance of missing the payment or spending it. In New Zealand of the four big banks, you’re looking at a $15 charge for late credit card payments as a maximum and $3 in a few cases.

Mistake #4 Withdrawing cash from your credit card

This is a common mistake among New Zealanders. They need cash for whatever reason and decide to use their credit card to make the withdrawal. Where you have an interest free period on credit debt that you spend, with withdrawals, you start paying interest on that amount immediately. Not only can you not avoid this charge, it’s even at a higher rate! It doesn’t matter who you are, there’s no excuse that ever warrants you inserting your credit card into an ATM. Just don’t do it!

Mistake #5 Not transferring your balance to another bank

While this mistake is a result of previous mistakes, it is still a good one to consider if you ever land up in the position where you have a hefty credit card balance. Banks are businesses at the end of the day and always looking for ways to gain more clients. So, what they could potentially offer is a 0% interest-free period of 12 months if you commit to settling all your debt in that period by bringing your debt over to them!

Mistake #6 Constantly turning to your backup credit card 

One credit card is enough, but let’s face it, people have become accustomed to using that one credit card for their day to day living. What does that mean essentially? Well, it means that we still need a card for emergency cash or the “rainy days”. Ergo – two credit cards. The issue with that thinking is that it could result in you just using the second one as much as you use the first one which you also told yourself was only for “rainy days”. Keep your debt consolidated, don’t fall into the trap of having multiple credit streams, because with that comes multiple fees and multiple interest rates, and it’s never a good thing.

Mistake #6 Avoiding your bank statement

So many people avoid this very necessary act. We get it, not everyone is great with admin, we’re not all equipped to deal with paperwork and numbers, but then do yourself a favour and find someone who will! Or get into the habit of it as soon as possible. There might be fees and charges on that statement that you have no clue you’re racking up and ultimately it might save you a lot of money a year when you’re done adding it all up!

Mistake #7 Not closing unused accounts

Guys and girls, just because you settled your account and you thought you did yourself a big favour and walked around searching for the medal that you feel you deserve, don’t bow and collect it just yet if you left the accounts open anyway. The reason is that you may have a zero balance, but those accounts cost you to remain active. Most credit cards come with annual fees of $30 to $40 per annum, that turns into a heck of a total when you look at the year in and year out if you’re not using the card and gaining no benefits as a result. So, settle your debt and close those accounts!