Fixing credit card debt problems - Part 3

10. LAST RESORT BANKRUPTCY

This really only works to your advantage IF you don't own real estate, shares, etc. IF you own property you may be forced to sell it all up when you go bankrupt. The period of your bankruptcy in Australia is generally three years but they can extend this if they believe you have not made a genuine effort to satisfy your creditors BUT it does stop the generally unpleasant bill collectors dead in their tracks.

There is a permanent record kept of your bankruptcy called the National Personal Insolvency Index which people can access on the payment of a fee. There are some restrictions on what you can do during the three year period but you can get full details on this online - just Google in "bankruptcy".

Remember too that during the three year period your creditors are able to take and sell any assets you acquire INCLUDING any inheritances and, strictly speaking, you won't be able to hold a job that involves dealing with money.

By the way, bankruptcy does not always solve the problem. If you are a compulsive spender / big noter / show off, you will be back in the same situation shortly after the bankruptcy period expires - so what's the point? Solve the underlying problems first for a long lasting solution problem to credit card debt.

11. AVOIDING BANKRUPTCY

The best way is through debt consolidation loans. Then making a genuine change in your lifestyle patterns and getting your debt consolidation loan paid off as soon as possible. There are companies that work on your behalf to arrange Debt Agreements between yourself and the credit card companies and others you owe money to. They freeze the interest owed on all your debts (a killer in the whole process) and it will then take, on average, three to four years to pay the whole lot off. It does, again, stop the debt collector in their tracks.

One of the pitfalls, and yes, there are pitfalls (they don't do this for the fun of it) is that if you default on one of the arranged payments, they then will often advise you to go bankrupt anyway and then you will have paid them their fee for two fifths of three quarters of nothing.

Many Australian companies advertise their services - yes, they make money out of you as well, but not as much as the credit card companies, and you get peace of mind to boot. But, you MUST make the payments you agree to or it is a waste of time and only a fool wastes time.

12. RE-ESTABLISH YOUR CREDIT RATING AFTER THE "BIG BUST".

This is really quite a simple affair as the credit card companies can hardly wait to get you in their clutches again. Pay all your phone and telephone bills and rent etc right on time for 6 to twelve months and then go to someone like Radio Rentals and rent a TV for 6 months (whether you need it or not). Pay this every month on time and then you have them for a credit reference in the future.

Do this with a few small store accounts and your credit rating will soon be back up to A+. But of course this time you will be in control of your credit card debt addiction and be able to control it with the value of hard earned hindsight. won't you? If you do take on a new credit card, do the following:

•  Get one credit card only
•  Find one with the lowest interest rate and fees
•  Choose a low credit limit
•  Pay out the entire monthly balance each month so that you don’t incur interest charges

13. IF YOU ARE IN A RELATIONSHIP

If you are in a relationship/family situation, everyone has to be 100% committed to getting out of credit card debt. They all must be rowing in the same direction or a) it won't work and b) it WILL lead to very large arguments as you will justifiably feel that you are the only one who's rowing the debt boat and they are just there for the free ride. Make sure you have everyone else committed to doing the same thing BEFORE you start your get debt free journey.

14. IN GENERAL

People in general ALWAYS TEND TO think that the "good life" is always on the VERY next level up to where they personally exist AT THE MOMENT.

So does having stacks of money (and "stuff") make you happy or is it having more money than the next person what makes you happier? 

Perhaps out of our primeval past comes the urge to show that we're better than others. 100,000 years ago, it would have given us happiness to have more animal skins than the troglodyte in the next cave. This would of course help ensure mating prospects, which would keep our genetic lines going.

This is not to say there is something strange or peculiar about measuring our success with money.

US President Theodore Roosevelt was a pretty smart dude. His words: "happiness is not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort.”

Thanks to http://creditcarddebtproblems.com.au/ for this information

Fixing credit card debt problems - Part 2

5. HOW MUCH DO YOU REALLY OWE?

Total the money you spend each month paying off those credit cards - wow - wouldn't it be great to have that fun amount to play with every month. Well that's what you will have once you get rid of that accursed debt. Be single minded about this.

Think of all the good things you and your family could do once a little bit of time passes AFTER you pay off those accursed things. And you could pay cash for them - not value plus 18 to 22%. Other people do this so why can't you?

6. WARNING SIGNS OF TOO MUCH CREDIT CARD DEBT: 

a) You don't even know how much credit card debt you are in.

b) You have at least one credit card that is at or over the limit

c) You only make the minimum payment each month on the credit cards

d) You believe you are only one good Lotto win from fixing it all up

e) You use cash advances to sustain your lifestyle

f) You lie to friends and family about your debt or, MORE IMPORTANTLY, you lie to yourself about it.
g) Your credit cards are more than 70% of their credit card limit

7. ASK FOR A LOWER INTEREST RATE ON CREDIT CARDS

Grab a bill from any account charging you more than, say, 14% interest. Dial the toll-free number on the bill and ask to have your rate reduced -- say, to 11%. Tell them that you'd really like to stay with them out of customer loyalty (embellish according to your acting skills), but that you have received offers for much-lower-rate or interest free transfer debt cards.

Expect to be made to feel very uncomfortable, but stand firm and remember that, to them, you are both a customer and a cash cow. That's right - you are their profit centre and if they can't stop dipping in to your pocket every month. they go broke as well. And they don't want now do they? Gosh, how would they ever keep up the golf club memberships?

You also stand to save a bundle. Remember the more calls you make, the more persuasive you'll become and the better you will become at this game. And don't think to yourself, "oh I could never pull that off", you would be amazed how many people do. And they are people just like you. And yes It does work. Just like sex, once you do it the first time it kind of comes naturally.

If you never ring them and ask, you'll never know what they would have said! And what's the worst possible outcome from the credit card company? So they say no.

8. REDUCE THE CREDIT CARD LIMITS

As you pay down the amount owing on each credit card, make a point of reducing the limit to match the amount owed as it gets less and less. In that way, you will not be able to book up more debt on the cards.

Yes, it a pain in the proverbial doing this on a regular basis but as you do it, you will come to realise just how much in debt you are and how much these credit card companies have been taking advantage of your credit addiction to feather their own well lined corporate nests.

9. REMEMBER THIS ABOUT CREDIT CARD DEBT

One of the smartest moves you can make is to tell the credit card companies involved that you are in strife and need help. The last thing they want to do is have to deal with other Australian companies that do Debt Relief Management Agreements or the Official Receiver In Bankruptcy. Those are bad options for any credit card company with only the certainty of loss as a result for them and they will generally go out of their way to help you overcome your problems as there is then still some chance of profit.

Ring them up and tell them if you really are at the desperation/no possible other options stage.

Thanks to http://creditcarddebtproblems.com.au/ for this information

Fixing credit card debt problems - Part 1

This is the first of a three part series on how to fix your credit card debt problems.

1. ESCAPE COMPULSIVE CONSUMERISM

Refuse to spend any more money and try and catch up. Become a non consumer - try everything you can NOT to be suckered in to the consumer society. Make it a new sub religion.

Don't consume any more than you absolutely need to survive. Ignore all the ads on TV - endless aren't they? - that are there just to entice you to spend money and add to your credit card debt. 

Watch non commercial TV instead if you have to - yes, I know the programmes aren't always mainstream, but variety is the spice of life. And by refusing to be brainwashed any more by commercial TV, you will end up spending less.

You don't have to have the latest IPad to make your life complete. You can only wear one shirt at a time. You can only eat one meal at a time.

If you do have an unexpected gain, pay it off the credit card with the highest interest rate. You don't know the interest rates on all your credit cards and store credit cards? Why not? 

If you really don't know how much your credit cards are costing you, you are doomed to spend the rest of your life paying off money to keep credit card company bosses in the fine style to which they have become accustomed.

2. CUTTING UP THE CREDIT CARDS

Save the credit card that costs you the least in interest and cut the rest up. No, not speaking metaphorically - REALLY cut the other credit cards up. You don't need them. I know, your head says Ï should keep them just in case even if I don't spend on them". Wrong!

The smartest move you'll ever make in the battle against credit card debt is to minimise the number of cards you have. Remember, if you want to buy a house or refinance a house, your credit score is based on the TOTAL OF THE CREDIT CARD LIMITS you hold. Note: they don't care how little you owe on them, they only count up the maximum limits on the credit cards and you will find you are ineligible for housing loans if you have a large total of maximums on the credit cards you hold.

Another consideration is to maybe keep the oldest credit card you have as length of credit history is one of the components "they" use in assessing your credit worthiness in those reports they do on you when you are asking for credit or a bank loan. By closing only your newest credit cards first, you make your average credit card history older which is a good thing from the lender's point of view.

2a A GOOD TRICK TO USE

To make sure you don't keep impulsively splurging on the credit card you decide to keep, put it in a three quarter filled plastic cup of water and put it in your freezer. In that way it freezes solid and needs at least 12 hours at room temperature (probably 24) to thaw it out so you can use it. No, it won't "ruin it". However, be warned, trying to thaw it out in the microwave will wreck the card and make it useless.

In this way you will at least have a day to reconsider if you want to put that new "must have"on the credit card.

2b ANOTHER GOOD TRICK TO USE

Look at what the minimum payment is on each credit card you have. Divide it by four and set up an electronic payment schedule so it automatically gets paid from your bank account every week to the credit card provider. In this way you will pay less interest on your credit card as the amount charged is on a daily basis. Your credit card interest will reduce significantly if you do.

3. CONSOLIDATE THOSE CREDIT CARDS

Shop around for credit cards offering exceptionally low interest rates and transfer the amount owing on your high interest rate cards to them. DO NOT then refill the credit cards you pay off. CUT THEM UP and throw them away.

If you can, there are heaps of people out there offering to refinance and consolidate your credit cards in to one amount, generally with an attractive 6 to 12 month interest rate - this is probably your last chance to get on top of things in this introductory rate period so don't waste the opportunity.

Spend the next 6 to 12 months doing nothing else but paying off this refinanced credit card amount. 

4. THE TRUE EMERGENCY CREDIT CARD

Put the one card you kept away in a safe but difficult to get at place for emergencies. You may just need it in the future. But use it only for real emergencies. A new wardrobe is NOT an emergency. A failed hot water system is. A new IPad is NOT an emergency. A blown up car motor is.

Thanks to http://creditcarddebtproblems.com.au/ for this information

New Financial Year Resolutions

Personal Finance Resolutions You Need to Consider

The New Financial Year is here and well under way already and that means it is time to act on some ‘new year resolutions’.

Here is a list of resolutions that can help you to get and keep your finances in order.

Live Within Your Means

This is probably the simplest of all steps that you can take to get your financial life in order - and the hardest to actually perform. Start by reviewing your budget over the past year to see where your money actually went.

(Be warned: this often leads to some disturbing and painful revelations, as it will reveal how much of your cash went into the register at the local liquor store or other proprietary establishment of your favourite vice.)

After this, see where you can cut costs without sacrificing things that you need. Finding a new cable/internet or car insurance provider can often free up about a hundred dollars a month. Financial coaching programs can help you do this and provide numerous other benefits as well.

Start a Retirement Plan

If you are not saving for retirement yet, now is the time to start. Your company retirement plan is a good place to begin saving, especially if your employer offers matching contributions. If you are already participating in your employer superannuation plan, consider increasing your contribution percentage or even making the maximum possible contribution, if you can afford it. If you make $40,000 a year, then a 15% contribution equals $6,000. If your employer will contribute 50 cents for every dollar you put in up to the first $3,000, then you have a total of $7,500 per year going into your plan. If you are 35 years old, then that would amount to $225,000 in contributions alone by the time you are 65.

Create an Emergency Fund

Nothing disrupts a well-planned budget like large, unforeseen expenses such as major car repairs, medical bills and legal fees. Resolve to set aside $200 a month every month this year to put into a savings account so that you will be prepared for this type of expense when it comes up. You may need to get an additional part-time job to fund this, but allocating some time for this now may be a very wise investment for you when or if catastrophe comes calling.

Get Out of Debt

This is one of the greatest financial feats that you can accomplish in a given year. Resolve to take a second job for 12 months and get your car loans and credit cards paid off. Of course, this is a major sacrifice for the year, but the money you save will benefit you for years to come. Paying off your debt is equivalent to getting a major raise, in terms of cash flow.

Working an extra 12 hours a week for one year, at $10 an hour, will net you an extra $5,000 for the year. Even if you don’t pay off your debt entirely, you will save hundreds of dollars in interest charges over the life of your loans.

The Bottom Line

These are just some of the general financial resolutions that you can make for the coming year to help you get back into the black and stay there.

Other Ideas

If you have ideas of your own, please contribute them to this blog.

Eliminate your mortgage faster - 10 tips to help

There are ways to eliminate your mortgage faster. Here are 10 tips to get you started...

1. Make more frequent payments. Sounds simple enough, but setting this as a goal is essential to your overall strategy. If you have any free cash, don’t let it sit around in your bank account – put it straight into your mortgage payments. The more you shave off the amount owed, the greater your equity becomes, and your future borrowing power too.

2. Set a budget. Plan carefully how much you can really afford – especially if you’re going to pay your bills with a credit card (see below). This is an essential part of a mortgage repayment plan.

3. Pay fortnightly rather than monthly. Ultimately, a structure whereby you pay half the usual monthly repayment fortnightly means you make about one payment extra a year. There are around 4.35 weeks per month in a 365-day year, or about 26 fortnights. With that in mind, paying $2,000 per month would net $24,000 in total payments. Paying $1,000 fortnightly would equal $26,000 in the year. This costs $2,000 more annually in this particular case, but it’s a method of increasing your payments in a balanced way.

4. Use a mortgage offset account to reduce the loan interest. A standard variable rate loan generally offers you the option of putting 100% of your income and savings into an offset account to reduce your loan interest. So, by paying your income directly into this account you can take a big chunk out of the principal.

5. Pay the first home loan instalment as soon as you settle. By making a repayment on the first day, you can reduce the principal immediately – and therefore all future interest repayments.

6. Align your loan repayments with your income cycle. Synchronising the repayments with your payday eases the budget process. Then you can always make the mortgage repayment one of your priorities – and spend on other items out of the rest.

7. Don't lower your minimum regular payment if interest rates fall. Interest rates have dropped lately, and it’s tempting to see it as an opportunity to get more cash to spend. If you had the discipline to pay the higher rate before, you should use this opportunity to pay off your loan faster.

8. Split your loan. Choosing between the security of a fixed rate loan and the flexibility of one at a variable rate can be difficult, especially when it’s not clear if interest rates will go up or down in future. Splitting allows a borrower to get some of the benefits of both – limited exposure to any volatility as well as protection from it.

9. Pay your expenses with a credit card. This option takes solid budgeting and discipline – and it’s not for everybody. However, if you use your credit card to take care of, say, $1,000 in bills per month, and you are able to pay that amount of debt off each time, you could have that $1,000 on your mortgage permanently.

10. Use internet banking for automatic repayments. A solid budgetary tool, this method gives you greater control over your repayments, as you can always alter what is drawn automatically. 

How long could you last if you had less income?

There is plenty of negative news around at the moment. Governments are shrinking the public service, power bills are rising and many companies are reducing staff. Looking overseas, times are tough in the US and Europe and we are fortunate that we don't live in Greece or Spain.

So, how long could you last if you found yourself having to cope with less income? What have you done to protect your personal economy from the vagaries of the world economic situation?

Once upon a time, the standard answer to the no-money dilemma was to borrow against your home or spend more using your credit card.

If you haven’t figured out the formula for a sound financial foundation yet, let me be very clear: spend less than you make. While it’s popular to say that consumption drives our economy, it also drives our ever-increasing debt. The trick is to smooth out the hills and valleys of our consumption and earnings. Yes, there are times when we need to spend more. And there are times when we earn more. But if every time we have extra money we find a way to spend it all, that leaves nothing for the troughs in our financial lives. And that means turning to credit. Some of us never recover.

If you’re still buying the argument that a line of credit or a higher credit card limit is a great emergency fund, it’s time to wake up. Lines of credit are nothing more than debt traps. Do you really want to be unemployed and $20,000 deeper in debt a year from now?

Without the “security” of a line of credit and in anticipation of the wolf at the door, it’s time to make sure you have a real emergency fund in place. If you haven’t already started building an emergency fund, ask yourself how long you could hold on if your income suddenly evaporated. Still think a line of credit will do just fine?  How deeply in debt are you prepared to go? And how much of your future income are you prepared to shell out in order to pay for having not been prepared financially?

Setting aside some of what you’re earning now for the eventual change in personal circumstances with which we’re all faced— unemployment, illness, death, divorce—is just good common sense.  So start now and that way you will build up a cash reserve to tide you over when the unexpected happens.  It is always better to use some of your savings than to go further into debt.

It's not always about money

If there’s one thing that usually gets neglected when it comes to talking about personal finance, it’s this: it’s not always about the money.

Not surprisingly, people make a lot of decisions that relate to money based on how much things cost, how much they could potentially make, or both. So of course those things get talked about a lot.

But after a certain point (the point where you’re not stressed out about where you’ll be living next month and whether or not you’ll have food to eat on a regular basis) money doesn’t have to take priority.

Other priorities

Sure, you may want to earn lots of money and minimize your expenses, but you can have other priorities too. And the option that leaves you with the most money out of two choices may or may not be the one that’s right for you.

There’s nothing wrong with deciding that you’re going to take a less stressful job even though you won’t make as much, as long as you’re willing to do what it takes to live within your new lower means. And there’s nothing wrong with deciding to keep some of your money in a plain-old savings account even though you could probably make more by investing it. Or in paying more for something you really love even though you could get a “better” version for less. Or in any number of things that may not be the optimum thing to do financially, IF those other things are your real priorities.

Money is a tool

Money is a tool that’s there to serve you, not the other way around. Use it wisely to get what’s most important to you, not just to end up with as much as you can of it.

Keep your real objectives in mind, and make smart decisions with your money based on how it will help you achieve those. Remember why you use money.

HOW MUCH IS ENOUGH?: The 4 consistent qualities of enoughness

"Enoughness” doesn’t mean voluntary poverty—it means discovering who you really are.

At a conference on alternative economics, I happened to sit at dinner with a man who had done our New Road Map Foundation course, Transforming Your Relationship With Money and Achieving Financial Independence. He told me this story about his own struggle to discover just how much was enough for him.

From time to time he goes to a rural monastery for a silent retreat. Meals are provided by the monks. The many acres of wooded land are laced with walking trails. There are several small sanctuaries with just a chair or two. Each room has a bed, a desk, a chair, a lamp and no more. The atmosphere is one of silence and peace. On one retreat he asked himself, “If I knew that everyone in the world would have enough if I had only this much, would this be enough for me?” The answer was a clear “yes.”

While all of us at the table could identify with the simplicity of that vision, we went on to discuss what things we might add to support not only our spiritual nature, but our work and sense of community as well. A telephone. Certain books. Certain files. Another chair for a guest. A computer, perhaps. The more we added, the more difficult it was to draw the line. Where did necessity end and excess begin?

Through my public speaking on personal economics, I come in contact with many people who are sufficiently awake to the needs of the world to have asked themselves that same question, “How much is enough for me?” So many of them, even those who speak out about the inequities and insanity of our consumer culture, feel they fall far short of the mark in practicing what they preach. They confess their “sins of luxury” to me with everything from sheepishness to painful guilt.

In my own experience, and through corresponding with many people, I’ve noticed a few consistent qualities in the lives of people who have come to know how much is enough for them.

1. They have a sense of purpose larger than their own needs, wants and desires. Desires are infinite. Fill one desire and another emerges. A sense of purpose, though, sorts real needs from whims and preferences and directs your attention to only those things that will really serve your mission—whether the “mission” is raising children, a garden, money or consciousness.

2. They can account for their money. They know where it comes from and where it goes. There’s a sense of clarity that comes from such precision and truthfulness. If you don’t know how much you have, you can never have enough.

3. They have an internal yardstick for fulfillment. Their sense of “enoughness” isn’t based on what others have or don’t have (keeping up with the Jones’, or down with the Ethiopians). It’s based on a capacity to look inside and see if something is really adding to their happiness, or is just more stuff to store, insure, fix, forget about and ultimately sell in a garage sale.

4. Like my friend at the dinner table, they have a sense of responsibility for the world, a sense of how their lives and choices fit into the larger social and spiritual scheme of things.

From these findings, I’ve developed a pledge that may help guide people in finding peace with what they have and what they need:

I pledge to discover how much is enough for me
to be truly fulfilled, and to consume only that.
I also pledge to be part of the discovery
of how much would be enough for everyone
not only to survive but to thrive, and
to find ways for them to have access to that.
Through this commitment to restraint
and justice, I am healing my life
and am part of the healing of the world.

“Enoughness” isn’t something to “live up to”—it’s something to discover through the process of truthful and compassionate living.

Thanks to Vicki Robin

Have your circumstances changed?

As unemployment rates rise across the world, and the likelihood of widespread redundancies increases, we suggest that you take steps to protect your financial well-being.

For those who are feeling unsettled by the recent spate of ‘lay-offs’ and are genuinely concerned about their job security the first course of action should be to put a away some wages away just in case.

With all that is happening in the economic landscape, no-one wants to be involuntarily out of work and/or be faced with prospect of looking for work in a very tight employment market,

In life, there will always be certain things that are beyond our control.

Take back some control

Most of us would have heard of the saying “save for a rainy day”. This is probably as relevant now as it has ever been.

What to do if you lose your job

If you lose your job you will need to think about the impact it will have on your finances. There are a number of issues you may need to consider.

Your entitlements

Before you make any decisions about your future, find out about your entitlements and the best way for you to deal with any money you may receive. You may be unable to reverse a decision you are unhappy about.

Your redundancy

If you receive a redundancy payout, you might want to seek professional financial advice. Make sure you understand the advice you receive and ask questions if you don't.

Your commitments

Depending on your age and your employment options, different financial issues will be a priority. Whatever your circumstances, you will probably need to review:

• your budget
• your credit cards, loans and mortgage
• your superannuation.

Take control of your finances and contact your lender as soon as you can if you want to make any changes to your loan repayments.

Talk to your superannuation fund about any benefit entitlements that apply on retrenchment. If your superannuation includes life or disability insurance, check whether it will continue when your employer stops contributing. Some funds may allow you to continue your cover but there may be only a small window of opportunity for you to make these arrangements.

Taking time out from the workforce?

If you don’t have another job lined up, plan on having an extended break or just want to change your lifestyle, you will probably need to make some changes to your finances.

A budget can help you work out what expenses you'll need to cover while you're not working. We can assist you with this if you are unsure how to proceed.

You may find it helpful to get some independent information or advice to help you plan.

Government assistance

If you lose your job, you may be eligible for government assistance and services to help you find another job.

The bottom line

Review your budget and stay in control of your money.

If you think you may have problems keeping up loan repayments, contact the lender as soon as possible.

Don't ignore your debts - they won't go away.

Cut your credit card interest

Are you caught in a cycle of credit card debt? Here are some tips for bringing your balance under control.

For cardholders who carry an outstanding balance from one month to the next, credit cards have become an expensive form of debt.

It is easy to convince yourself that you are are paying off the balance each month, but the average account balance crept up from $3249 at the end of 2010 to $3309 at the end of last year – so many people are not as diligent as they think.

Research group Canstar has tracked the change in credit card rates in the past few years and found they have kept rising, whatever prevailing interest rates have been doing.

LOW RATE CREDIT CARDS
	Purchse Rate (%)	Cash Advance Rate (%)
Community First CU	9.99	9.99
Bankmecu	10.74	10.74
Bankwest	10.99	21.99
TeachersCU	11.50	11.50
Defence Bank	11.74	11.74
Heritage Bank	11.80	11.80
Citibank	11.99	21.74
Members Equity Bank	12.25	12.25
Intech CU	12.30	12.30
Suncorp Bank	12.74	21.99
Virgin Money	12.99	21.69
As at 31/02/2012	Source: infochoice.com.au

Low rate credit cards.

In the middle of 2007, when the Reserve Bank's official cash rate was 6.25 per cent, the average rate on a gold card was 17 per cent. Today, with the cash rate at 4.5 per cent, the average gold card rate is 19 per cent, with many card issuers charging more than 21 per cent.

Consumers have to consider whether a rewards card is worth the cost; whether a balance-transfer deal would save money; or whether to choose a low-rate, no-frills card instead.

The executive director of Financial Counselling Australia, Fiona Guthrie, says out-of-control credit card accounts are a common cause of financial hardship. She says even people on good incomes often fall into the trap of holding too many cards or accepting inappropriate credit-limit increases.

REWARDS ARE COSTLY

The chief executive of RateCity, Damian Smith, says consumers who spend $1000 a month on their cards will come out behind on the cost of a rewards program.

''Spending that much will get you about $100 worth of rewards each year,'' he says. ''But the annual fees on many rewards cards are higher than that. Only the big spenders get any value out of the rewards and then, only if they pay their full balance each month.''

Canstar classifies big spenders as people who outlay $60,000 or more each year. For those consumers, reward packages costing hundreds of dollars a year are worthwhile.

BALANCE-TRANSFER TRAPS

The consumer group Choice says a low-interest balance transfer can be a good way to get credit card debt under control but it warns that ''for the unsuspecting or undisciplined consumer, balance-transfer deals can be a disaster''.

It says consumers need to recognise that the low rate applies only to the balance they have transferred from their old card. In most cases, new purchases will be charged at the standard rate, which is usually, but not always, much higher than the balance-transfer rate.

Choice says consumers are often attracted by a low transfer rate, which is a short-term benefit, and are then saddled with a card that has a high rate, high fees, or features they don't need.

The choice of a zero rate, a longer term on the balance-transfer rate or a low revert rate will depend on how quickly you think you can make a significant reduction in your card debt.

NO-FRILLS CARDS BEST

Canstar classifies credit card users according to the amount they spend and whether they pay their balance each month.

There are the big spenders, the everyday spenders and the occasional spenders. Then there are the habituals - card users who struggle to pay off their cards and carry a balance from month to month.

Canstar's most recent review of credit cards includes a list of ''outstanding value'' cards for habituals. These cards tend to be offered by small financial institutions and generally have relatively low ongoing interest rates and no rewards programs.

Habituals who want a good deal need to look beyond their big local bank.

Card issuers on the list include bankmecu, Bankwest, Community First Credit Union, Greater Building Society, Heritage Bank, Horizon Credit Union and Intech Credit Union.

Virgin Money launched a new low-rate card, offering a rate of 12.9 per cent and a balance-transfer rate of 2.9 per cent for nine months. The annual fee is $59.

Rates for no-frills cards range between 10.99 per cent and 12.95 per cent. Some have no annual fee and for the rest, the range is between $30 and $99.

Key facts
Starting in July, credit card issuers will have to give applicants a key fact sheet that sets out the card features in a standard format. The idea is to make it easy for consumers to make comparisons.

It will include the minimum credit limit, the minimum monthly repayment, the interest rate on purchases and cash advances, any promotional rate and the period for which it applies, the balance transfer rate and any interest-free periods on purchases.

Details of the annual fee, any late-payment fee and any circumstances in which other fees would be charged will also be included. It will also give details of comparison websites.

Source:    www,snh.com.au