Is your New Year’s resolution to crack down on credit? Then here are five tips that could help you become credit smart.

Only spend what you can afford
It’s easy to go over budget during Christmas when sales and presents are top of mind during the festive season.

The unfortunate consequence is a debt that could linger all year long. Ideally, it is best to only put on credit what you can afford to pay off in full each month.
Pay less interest
Paying only the minimum amount due each month means you will incur interest, which is then added to your balance. This too then incurs more interest next month and is called compound interest.

It can make it hard to get ahead on your repayments. If you are unable to pay the balance in full, try to pay more than the minimum amount to minimise this effect.

Stop paying late fees
It may seem obvious but making payments after the due date incurs a late fee. Try to time your payments so they occur on or before the last day to pay to avoid this.

A good budgeting habit is to schedule your payments a week earlier than the due date.

Create a safety net
Unexpected expenses like major car repairs can blow out your budget and make credit seem like the only option. Try saving a small amount each pay and putting it towards an ‘emergency only’ account to prepare for such scenarios.

Know your limit
While offers of a higher credit limit on your credit card may be tempting, it is best to know what works for you personally and choose to stick to a lower amount.

Similarly, it is best to keep the number of cards you have to a minimum.