6 credit management tips
This may sound obvious, but it's extremely important, because living within your means will keep you from having to resort to credit. 2: Pay your bills on time.
Every time you pay a bill on time, you build your credit history and put yourself in a better position to obtain credit at lower rates in the future. Pay late and not only will you be faced with fees, but you'll also be hurting your credit standing. 3: Pay more than the minimum.
Say you have a R2,000 balance, and your minimum monthly payment is about R40. At an 18% interest rate, you'll end up paying nearly R5,000 and it will take more than 30 years! The minimum payment covers mainly just the interest, so the outstanding balance still remains, against which you will be charged interest in the next payment. 4: Don't chase lower rates by transferring balances.
This is a tricky process that involves fees, penalties, and other catches, and usually ends up costing more than it saves. Balance transfer offers almost always have a low teaser rate that isn't fixed, which usually jumps much higher when the introductory period expires. Plus, there are often fees from both banks involved, meaning you pay twice. 5: Pay off accounts with the highest interest rates first.
When you pay your credit card balance, it's like getting an instant return on your money. So if you have two cards, one with an interest rate of 18% and one with a rate of 24%, and you pay the 24% balance first, you're instantly making an extra 6% on your money! 6: Don't apply for new credit cards just for the sake of it.
As you pay off existing credit you will be offered more credit. Banks know you may be more likely to bite, and they want to hook you. Take those letter you get in you letter box and throw them away!
