Don't Pay Now; Pay Later

Whilst spending a gazillion dollars on vintage designer clothes, Rachel Zoe infamously said on The Rachel Zoe Project “you don’t pay now, you pay later…the beauty of credit cards it that you can pay later” (*cringe* yes, I did watch and love this crazy freak of a woman).

Whist I am not against having a credit card I certainly don’t subscribe to Rachel’s way of thinking.

As constantly plugged on Today Tonight type shows and finance websites, credit card debt is very bad debt. Generally interest rates are massive and frankly it is all too easy to spend that extra bit of credit whilst promising ourselves we will pay it back. And of course - we never can.

However, in every girl’s (or guy’s) life there comes a time when the most amazing must have shoes come on sale for a ridiculous price and with the bank bare the credit card is the only possible option. Guilty as charged.

The point I am trying to make is that with a credit card comes discipline. Whilst the upside is thousands of dollars of credit the downside is a very nasty credit rating if you default in making the minimum repayments.

So how to manage credit cards.

In my opinion:-

• yes have a credit card.

• Only use it if you can repay the total spend each month (ie never incurring interest)

• Use it for emergency situations (eg the once in a lifetime sale) but be sensible and make a plan to pay it back over the shortest time possible

• Don’t take up the increase limit options.

• Maxed out? Then DO shop around. There are lots of deals to transfer balances with 0% interest for a set period of time. Budget what you can afford to pay each month and plan to do this so that the debt is repaid as soon as possible.

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Please note – that this is not advice but my opinion only as each individual’s case is different. Should you wish to seek help or advice please contact me privately at sarah.willoughby@willoughbys.com.au or alternatively seek advice from a qualified accountant and/or financial adviser.