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There are two types of credit card users:

1. Users who use the credit card and pay it off in full each month.

Firstly, great stuff! You are paying your credit card off in full each month. But, can I suggest that you actually may be overspending?

The chances are if you are paying off the card in full each month, you are earning a reasonable income to be in a position to do this. Due to this level of comfort, you could easily be doing mindless spending! Hey, that's fine, but I just wanted to let you know that you could be cheating yourself out of better savings while still being able to keep your lifestyle!

Even good income earners still have financial goals such as growing wealth and paying off debt. Maybe, if you stopped using your credit card and started using a Spending bank account, you may spend within a boundary and SAVE a whole lot more money!

Yes, you can still use credit cards. But, how?

Use your credit card to pay for bills and other necessary expenses via direct debit or auto payments. Then, from your Household Expense account, set up a Direct Debit to pay the card each month, instead of the individual bill!

Set up what your weekly spending boundary and use your credit card to spend rather than the Spending bank account. But, if your credit card bill each month is HIGHER than four times of your weekly spending boundary, then that's how you know that you are overspending. 

Also, remember that you can use your debit card for Internet purchases!

2. Users who use the credit card and only pay off the minimum each month.

If you can't afford to pay off a credit card in full each month, then this means you are using your card to pay for your daily expenses. This is a clear sign that you should cut up your credit card. Continuing to use your card could cost you a lot of additional interest payments, creating long-term financial behaviour that isn't good.

Using the Money Map will help you figure out what is coming in and going out of your bank accounts. This will show you how you can stay within your spending boundaries, and possibly start paying off debts!

About the author

Tracey Munns is the Co-founder and CEO of VerdiPlus and a specialist in personal wealth creation. She is an engaging energetic business person widely experienced in aspects of the financial services industry. Tracey holds a Bachelor of Commerce, is a Registered Financial Adviser and a noted businesswoman and public speaker. Her passion is to help as many people as she can to 'love their finances and change their lives'

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