There are also apps you can use if you need more reminders! Getting and staying in this habit is crucial to healthy credit card use. Sign up for an online credit card account if you have not already done so, and regularly log in to keep check on your spending. In order to ensure you don’t miss payments and you are staying under your limit, track your spending every month. A good rule of thumb is to keep your purchases to 30% of your credit limit, so for example, spending just €30/£30 a month on a card with a limit of €100/£100.
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Flying to close to your full credit limit on a frequent basis can be another red flag to lenders. Stay below your limit as much as you can at all times. So if you know you will not have money at the end of the month to pay for a purchase you’re planning to put on your card, then don’t use the card! It’s as simple as that. In Northern Ireland, Credit Reference Agencies provide this service to lenders. Lenders are legally obliged to consult this register when making a decision on whether to lend amounts of €2,000 and over to you. The Central Credit Register in the Republic of Ireland and th is a centralised system which stores information on all loans of €500 or more, including credit cards and even overdrafts. This can be a major red flag to potential future lenders if/when you need to borrow for a mortgage, car etc. Aim to pay off more than the minimum repayment – the maximum amount you can afford to pay. If you can’t achieve number one every month, then ensure you pay the minimum payment in full and on time. Paying your balance in full is the best, and fail-safe way, to stay out of credit card debt. If you only pay the minimum repayment every month, you’ll pay a lot of interest and it could take years to clear the debt. This one is a no-brainer. Note, clearing your balance in full is not the same as clearing your minimum repayment, which could be significantly lower than the balance. Clear your balance in full and on time every month.
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Read on for our top tips on how to manage your credit card. So at the very least, credit card users should get to grips with how their credit card works.* Indeed, only 14% in the Repbulic of Ireland and 18% of Northern Ireland credit card users said they have made a New Year's resolution to throw away their credit card in 2022. However, credit cards have always been hugely popular so, for the majority this is unlikely to happen. The best course of action is to clear the balance in full, bin the card and be done with it. This can throw their household budget out of whack and ensure they remain in a cycle of unnecessary debt. The reality with this lack of knowledge is that people will end up paying more than they anticipate when they use their credit card, as they are not factoring in the – often hefty – interest charged. Overall, the survey highlighted a significant lack of understanding on how interest is applied. Just over a third (34%) of respondents believe they pay less than 5% in interest. In Northern Ireland, those who responded that they are familiar with the credit card interest rate they pay, 21% think they pay between 6% and 10% while 25% think they pay between 18% and 24%. One fifth of these respondents believe they pay less than 5% in interest with over half believing they are paying less than 10%. In the Republic of Ireland of those who responded that they are familiar with the credit card interest rate they pay, 26% think they pay between 11% and 17%, while 38% think they pay 18% to 24%. Even among those in the survey who said they do know what interest they were paying, the results proved differently. Our latest research has revealed that although more than half of the population on the island of Ireland owns a credit card, a whopping six in ten have no idea what interest rate they are paying. Do you really understand how your credit card works?
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