Plastic money never feels like real money, that is until the bill comes. They’re great for flexibility but unless managed well, credit cards can become a real trap and one that takes time to dig ourselves out of. So, at the risk of taking the fun out of wielding the credit card on a good old fashioned shopping trip, here are some tips to keep the plastic temptress in her place.

(1) Minimise the number of cards you keep. Having a stack of credit cards and relationships becomes difficult to manage, quickly. If you need more than one, consider having one for regular use – and pop it in the wallet only when you know you are going to use it – and one for emergencies.

(2) You choose your credit limit. Many credit providers apply a higher ratio of credit-to-income when determining your limit than you may actually be able to afford. The best way to avoid falling into this trap and spending money you don’t have, is by taking control of the limit you feel comfortable with.

(3) Can you pay the balance back in a month or two? Paying the monthly balance every month and on time is great, but it does mean you’ll continue to owe money which with interest can add up quickly. Before you swipe or insert the card, consider whether you can pay back the purchase amount in the next month or two.

(4) In the red? Meet the minimum plus. If the plastic temptress has had her way and caused a bit of mayhem already, start chipping away by making your minimum monthly payments plus a little extra (or more if you can afford to). It’s easy to put bills that feel out of our control in the too-hard basket, but small changes, over time will make a difference. In situations where the debt has really got out of control, it may be more cost effective to roll the outstanding balance into a personal loan. That way you know the debt will be paid off eventually.

(5) Ask, and you may just get. You will have noticed bank and other credit providers advertising low or no interest rates for balance transfers. The hunt is on for new credit customers all the time. Use this to your advantage and ask your provider for reduced fees and/or interest rates. There’s no harm in asking and you may be surprised at the lengths they will go to to keep customers.

(6) Be on time and aware. One of the best strategies in keeping your plastic temptress in her place is keeping your spending front of mind. Read your statements each month – they’re a good reminder of whether you are spending according to your own set of rules – and make your monthly payments on time. Keeping up regular payments does two things (1) it ensures you have your finger on the pulse of your credit card spending / debt and (2) it builds a positive picture of your credit behaviour with your provider – handy when it comes to asking for interest rate and fee reductions. In some situations, you and credit are just not a good combo and so it might be time to break up with your credit card. Consider switching to a debit card or a card with a very low limit.

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