Positive credit habits to cultivate in the New Year

Industry super fund-owned bank ME offers some tips to curb poor credit habits and enjoy a prosperous 2019.

Credit cards can be an extremely handy cash management tool.  However, research by ME has found 70% of Australian card holders have developed some poor habits around credit card use. We look at five behaviours you should avoid to get more from your credit card in 2019.


  1. Carrying ongoing card debt

One in four (27%) card holders admit to not paying off their credit card in full each month. Sure, there can be times when, for a variety of reasons, it’s not possible to clear the slate, but if you are consistently carrying outstanding card debt, you could be wasting money on interest charges. 

Handy tip: Aim to clear the balance by paying more than the monthly minimum and consider a low-rate credit card or, even better, use a debit card for purchases while you focus on paying off your credit card.


  1. Using a card for big ticket buys

ME’s survey revealed that one in three (31%) card holders are making purchases on their credit card that will take more than six months to pay off. This inevitably means paying interest on the item, which will bump up the cost.

Handy tip: For big ticket buys, consider alternatives like saving to cover the bulk of the cost, or taking out a personal loan if the rate is lower – it could mean a saving on interest costs.


  1. Withdrawing cash from an ATM with a credit card

Cash advances typically come with a much higher rate than purchases. If you regularly use your credit card as a source of cash, as 31% of card holders do, it could be time to rethink your budget.

Handy tip: Head to ME’s free online school of money, Ed, where the module on ‘Budgeting’ explains strategies to regain control of your money.


  1. Having savings while owing money on your card

Two out of five card holders fall into the trap of having cash savings while still owing money on their credit card. It’s always sensible to have rainy day money but the catch is the interest rate on your credit card will be higher than the rate you’ll earn on savings.

Handy tip: It can make better financial sense to put savings to work by paying off your credit card, and saving on interest costs.


  1. Using a balance transfer but holding onto an old card

Balance transfer deals provide a window of opportunity to get ahead with card debt.

Handy tip: Don’t forget to close your old credit card account. That way, you’ll save on annual card fees, and you won’t be tempted to reload the old card with fresh purchases.


By avoiding these widespread credit card habits, you can enjoy all the convenience and security that credit cards provide without worrying about rising card debt or unwanted interest costs.

This article is brought to you by ME. For more information, please visit www.mebank.com.au.

Members Equity Bank Limited ABN 56 070 887 679.