Friday, January 22, 2010

Why Pollyanna has a credit card problem

As part of my day job, I write finance pieces for Ninemsn's Money website. I've also written a book about paying off your credit cards. Before you ask, yes I do - pay my card off in full each month, that is. One thing I discovered during researching the book is that the positive thinking that infiltrates so much of our daily lives (translates loosely into 'she'll be right' in Australia) is, as I suspected, highly overrated. Particularly when it comes to your finances.

Experts agree that one of our biggest problems with credit cards is optimism. We think - no, make that firmly believe - that we will pay our debt off in full every month, without fail.
So we don't read the fine print when we choose our card. We sign up for rewards, air miles and every bell and whistle we can find, without thinking about what will happen if - just imagine - we bite off more than we can chew one month and, gasp, don't pay off the full amount.

So the huge interest rates that often underline rewards programs are overlooked. Unfortunately, once they kick in, they cost us big bucks, which can mean that every month we roll over (or 'revolve' as the lingo goes) more and more debt. All because we didn't take a balanced view of our credit card usage.

It doesn't always pay to be optimistic. In fact, credit cards are one area where keepin' it real is essential. Get to grips with how you actually use your card - not how you think you do or how you'd like to - and you've got a better chance of wrestling your debt into submission.

For help with choosing a card visit


  1. I totally agree. I learnt the hard way in my early 20's when I got my first credit card. Spending spree - and loads and loads of fab clothes, shoes and accessories later I realised *gulp* that I couldn't pay it off. So I just paid the min each month.

    I cut up the card and vowed never again, and eventually paid it off.

    Now, while our CC is set up with 'points' for rewards - and we put almost everything on the card to get the points - we ALWAYS pay the total off in full each month. Not negotiable. Never negotiable.

    Rewinding! x

  2. I hate credit cards.

    They annoy me. I never seem to get it at zero as there is always some direct debit that sneaks up on me.

  3. This is so true. I know so many people who have been caught out chasing reward points, never paying it off in full and paying way more in interest and annual fee than they should.

  4. Ugh. Credit card debt. Don't even go there. It takes so long to pay it off and is so easy to rack it up.

  5. I need to buy your book! Things have gotten out of hand here. We are winding back but credit card debt hurts! Thanks for Rewinding and reminding me that I have such a good source of advice in you! x

  6. After overcoming credit card debt problems in my early 20s, I boringly pay off mine every month...

  7. Love this rewind! We have always paid off our credit card in full, but since the kitchen renovation... I'm not so sure. This last few weeks it's been more like "In for a penny, in for a pound!"

    Not pretty. (But my kitchen is.)



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