Tips to make you card smart
Manage your spending and maintain a good credit historyCredit cards and charge cards are important financial management tools that allow you to purchase the things you want sooner – and pay for them later. But, because cards are so convenient, it can be tempting to overuse them, and overspend your budget.
Being card smart includes knowing how to manage your spending and realising the importance of having a good credit history.
These simple tips can help you be even more card smart:
- Know your credit limit and don’t exceed it.
- Know the due date of your payment and be disciplined about making sure your financial institution receives your payment on time.
- Always pay at least the minimum due on your credit card to keep your account in good standing.
- Avoid interest charges by paying your credit card balance in full each month.
- Use online account management tools to keep track of your card spending. That way, there are no surprises when your statement arrives.
- Avoid taking cash advances. They often incur a fee and can add to your debt and borrowing levels.
- Make a budget, and stick to it. Track your spending to help you remain aware and in control of your purchasing behaviour.
- Regularly review your monthly statements to ensure that there are no errors or unauthorised charges on your account.
- Be sure to update Automatic Payment Plans / Regular Payment Arrangements if your circumstances change e.g. you change address. Please see below for some tips on managing Regular Payment Arrangements.
- Check your credit bureau file once a year to verify that your credit information is correct. This will help to ensure that your information is accurate and up to date. You can request a copy of your credit file from the credit bureau and have it sent free of charge within 10 working days. You can choose to have a copy sent within 24 hours for a fee.
How to manage your Minimum RepaymentsEffective July 1 2012, your American Express Credit Card statement now has more detail about making only minimum repayments on your account. Your statement already includes the minimum amount you need to repay to keep your account in good standing. The new statement includes more information about paying off your balance with this minimum each month.
What is the Minimum Repayment Warning?
The table that appears in your statement will show two things (based on the assumption that you make no additional transactions on your Card):
Row 1. Shows the total time it would take to repay your current balance if you only pay the minimum amount each month, as well as the estimated total interest charges that would be applied. This figure takes into account the different interest rates on your balance.
Row 2. Calculates the amount you need to pay off each month to clear your balance in 2 years, the total interest you would pay, and how much you would save compared to only paying the minimum amount. This monthly payment is determined using the highest interest rate on your balance.
When estimating the total time needed to repay your current balance in full and the monthly amount needed to pay off your account in two years, we assume that your statement is issued on the same date each month and that you always make your monthly payment on the payment due date.
For more information, see the How To Read Your Statement for your Credit Card.
If you make only the minimum payment each month, you will pay more interest and it will take you longer to pay off your balance.
If you only pay the minimum payments on your account each month, the interest you pay may end up being more than the original debt. For many Cardmembers the time it will take to pay off this balance at the minimum amount could run into years.
What you can do to clear your debt faster
You can reduce the amount of interest you pay by regularly repaying more than the minimum amount by the due date every month. The more of your balance that you pay off now, the less interest you will pay
The Minimum Repayment Warning on your statement will show you the payment you should make each month to pay off your balance in 2 years. You will also be able to see how much you save in interest by paying more than the monthly minimum amount.
To explore different repayment scenarios, visit the Australian Government Money Smart credit card calculator.
Tips for managing Regular Payment ArrangementsWhat is a ‘Regular Payment Arrangement’?
Regular Payment Arrangements can be either a recurring payment or an instalment payment. In credit card terms, a Regular Payment Arrangement is an agreement between you (the cardholder) and a merchant in which you authorise the merchant to bill your card account at regular intervals (e.g. monthly or quarterly), or at intervals as agreed by you. The amount may differ or be the same for each transaction.
An Instalment Payment represents an agreement between (the cardholder) and a merchant in which you pre-authorise the merchant to bill your card account with a fixed amount at predetermined intervals for a predetermined time.
Recurring Transaction: you may ask your local gym to charge your monthly membership fee to your credit card each month.
Instalment Payment: you may have purchased a new television from your local appliance store and are being billed by them for a fixed amount in multiple periods until a defined date i.e. the date at which the full amount has been paid off.
What are my responsibilities with Regular Payment Arrangements?
You should keep a record of all Regular Payment Arrangements you have established with merchants and store it in a safe place. A template for recording your Regular Payment Arrangements is available from the Australian Payments Clearing Association website. Use the template provided to record all your regular payments .
You are responsible for notifying the merchant when your account details change, including a change in card number and/or change of card expiry date. Either contact your merchant by phone, mail or internet and follow their instructions; or generate a Change in Account Details letter to your merchant. We recommend you keep a copy or a record of any Change in Account Details letter sent to your merchant with your earlier Regular Payment Arrangements. This correspondence will be required if your merchant does not comply with your request in a timely manner and if you decide to dispute any incorrectly charged payments.
How do I cancel a Regular Payment Arrangement?
It is your responsibility to contact your merchant and request they cancel your Regular Payment Arrangement. Be aware that you may be required to provide alternative payment details if there are balances still outstanding on the goods, and/or the services will continue to be provided.
If after a reasonable time, your merchant fails to cancel your Regular Payment Arrangement you may contact your financial institution for assistance.
Note that closing your scheme card account does not automatically cancel your Regular Payment Arrangements on that scheme card account.
What if my card number and/or expiry date changes?
If you have provided a merchant with your card number for a Regular Payment Arrangement and your card number and/or expiry date changes during this Arrangement, you must contact the merchant to advise them of the new card details. Failure to advise the merchant of these changes could result in the cancel of goods and/or services (e.g. cancellation of your car insurance policy).