Credit cards have both pros and cons.  We should all be aware of the trouble you can get into 

by running up debt on a credit card that you can’t afford.  Simply purchasing things that you 

“must have” on a credit card will likely end you in debt if you do not know when you will 

be able to pay it off.  Good budgeting will help you save for those wanted items but will also 

get you into the habit of knowing what you can spend.

But…..

Once you know how much you spend each month, you’ve planned a budget and kept to it, 

you can make credit cards work for you.  There are two main ways in which you can benefit 

from having a credit card. 

1)      Rewards Points

2)      Keeping cash in your savings account or mortgage

Rewards Points is the obvious benefit that credit cards can give to you, however you have to 

balance the benefits versus the annual fee and interest rate.  On each reward points card 

we’ve given you an idea of how much you would have to spend in order to get a flight from 

Sydney to Melbourne. Weigh this up with how much you will spend each month and how much 

the annual fee is and you should be able to work out whether the card is worth having.

Keeping cash in your savings account or mortgage.

If you use your credit card to pay for your monthly groceries, petrol, pay your electricity bill, 

pay for dinner or even treats then each time you use your card you will be leaving money in 

your bank account.  So long as you pay these bills when the interest free period is up then 

you will not pay anything to borrow this money from the bank.  But interest on mortgages 

and some savings accounts is paid daily, so by leaving more money in your savings account 

for the month you will actually make money.

Here’s a hypothetical example for you.

Jack and Jill who have two children have a credit card and they use it for the basic essentials.  

On the 1st day of each month they go to the supermarket and buy the basics, they fill up 

their two cars and they pay their bills.  Halfway through the month they go back to the 

supermarket get the essentials and fill their cars up with petrol again.

Each shop was $500 and each time they filled the cars it cost $70 each.  Their electricity bill is 

If they pay the credit card in full at the end of the month they will not pay any interest.  But by 

leaving the money in their savings account earning 5% interest then they will earn.

$500 @ 5% / 12 months = $2.08

$140 @ 5% / 12 months = $0.58

$500 @ 5% / 12 months but half a month= $1.04

$140 @ 5% / 12 months but half a month  = $0.29

Total Saved $3.99 per month.