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Active Retirees : Active Retirees Dec-Jan 2012
34 | www.probussouthpacific.org PERFECT MATCH? Canstar Cannex outlines four common profiles that credit cards are usually tailored to: Habitual spenders: struggle to pay off the debt over longer periods, so should look at low rate cards with very low or no annual fees. Everyday spenders: use their cards for just about everything such as groceries and petrol, and then pay off the balance in full every month. For this type of spender, an interest-free period is important, but the regular interest rate is of little concern. Cards that also have reasonable annual fees and rewards programs that the cardholder is interested in may be good options. Occasional spenders: use cards for emergencies or seasonal expenditure and then pay off the balance over the next few weeks or months. They should look for low rate cards with low or no annual fees. Big spenders: earn and spend a lot of money on credit cards and nearly always pay off the balance. Suitable cards for them could provide perks such as good rewards programs. get a rewards card. These can offer you travel options and cash back.” Debit cards The recent shift away from credit cards has seen more people take up alternatives that offer the flexibility of credit cards with the ability to use their own money. Reserve Bank of Australia figures show credit cards were used 131 million times in July 2011, but debit card usage surged up 18.9 per cent to 204 million times. This change from credit to debit reflects growing conservatism after the GFC, according to the Reserve Bank of Australia. “People are getting smarter on how to manage their money,” Salkow says. Get smart Getting smarter is the only way to make credit cards worthwhile. “If you are diligent and in control of your spending they are a good thing, as they provide convenience,” Salkow said. “But you need to have a proper tracking system of your finances to get good use out of credit cards.” The message is that although you may find a card suited to your needs, the potential to overspend is always there, a sentiment echoed by Arnold. “The main downside with credit cards is their potential to make spending easy,” he said. “There is a huge number of people struggling with credit card debt at the moment. People can fall into the trap of only dealing with the minimum repayments on their outstanding debt, which is often as low as two per cent. Human mentality can make people think ‘I’ll pay it back later’, and rack up huge amounts of debt. You have to be very disciplined in your use of credit cards.” • • Credit cards were used 131 million times in July 2011, but debit card usage surged up 18.9 per cent to 204 million times. FINANCE
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