How can Australian millennials handle their credit cards better?
It’s not just about smashed avo. Despite many articles claiming Australia’s Gen Y (millennials) are frittering away their finances on things like expensive brunch, there’s much more at play. High property values, increased demand for property and wages that don’t keep up with some of the costs of living are just the beginning of the struggles for young people in today’s landscape.
But we wouldn’t be much help if we just focused on the doom and gloom now, would we? Here are some ways that millennials can make the most of their money in difficult financial times – especially when it comes to credit cards.
1) Minimise interest on your debt
More than half of millennials (55 per cent) own a credit card, according to 2017 information from Finder – but how many actively think about their interest? With Finder also reporting that one in three Australians have missed a credit card repayment, it’s a big issue that can make or break your finances.
Finding a credit card with a low interest rate can make all the difference when your budget is stretched every month. With low rate cards offering significantly lower interest than standard credit cards, it’s a good step for the budget-conscious millennial.
2) Understand the transfer
When you have multiple debts, prioritising the one with the highest interest is often a good idea. But you can go beyond this, and consolidate all of your debts into one simple package.
Consolidating multiple lines of credit into one can be done in some situations with a credit card, although there is often a specific interest rate for this (called a balance transfer rate). Many young people turn to credit in times of need, and this isn’t necessarily a bad thing. It helps you build a good credit history and improves your spending capacity. However, you have to make sure it’s debt you can manage – a transfer or consolidation can help.
3) Read the fine print
Attractive interest rates on Australian credit cards and balance transfers can blind you to some of the hidden costs involved in using a credit card. Sometimes, interest rates will stay low for 12 months then revert to a much higher base rate. Annual fees can be a significant pain point, while cash advances or withdrawals can also sting you with extra costs.
The reality is, many people in Australia have to live week to week – and these fine print costs can be the difference between living comfortably and struggling to get by.
If you want to find out more about using credit safely or securing a low interest rate on a credit card, talk to the team at Beyond Bank.