A MAJORITY of Australians say they know the exact fees on their main credit card but almost half have still been stung with late payment fees and a quarter have been hit with with fees for not paying enough of their monthly bill, a survey reveals.

This contradiction between knowledge and behaviour is further illustrated by almost a third of the respondents to the news.com.au credit card survey saying they knew the interest rate on their card.

This is concerning because the amount of money people put on their cards, and ‘kind of’ budget to pay it off, is huge. I know when I pay on my credit card, I tend to think about it later, then forget and have to pay the interest at the end of the month. It’s annoying, but my fault entirely. But at least I know what my interest rate is. I don’t think about it, because it seems incomprehensible that they are even allowed to charge that amount on a card.

The good news, it seems, is 44.8 per cent of respondents said they paid their credit card debt in full and only 12.8 per cent said they only made the minimum monthly repayment.

The survey also found that more than half of all respondents - 55.2 per cent - had been asked to pay a surcharge when using their credit card to make a purchase at a business or in a shop.

The respondents to the survey were most male - 68.6 per cent - and more than half of had a gross household income above $75,000 per annum.

Pay off your monthly bill

It seems like an obvious one, but the amount of people who never pay off their monthly debt is staggering.

Ignoring the minimum monthly payments on your plastic is the sure way down the rocky road to insolvency, says entrepreneur and author Tony Melvin.

“Killer debt must be paid off as soon as possible.”

By accumulating credit card debt, you are ripping yourself off in the future, because it’s the future you that has to pay off this debt, he said.

“Money management is more of a time game than anything else. To avoid debt, you need to make sure you set aside money for the present and the future.

“People’s problem is that they spend their future money - that’s what using credit is.

“By doing this, you are really ripping yourself off as it’s the older, tireder, harder working you that has to pay that off.”

Credit card tips:

You hear this all the time, and it might almost seem like a cliché, but if you have a substantial credit card debt, you should look at finding a lower interest rate, and tht will help with paying off the debt quicker. There are many different cards that provide this. One such website, which allows you to look for the best credit card is Credit Card finder. You can find them at www.creditcardfinder.com.au

What is your financial goal?

One goal should be having a ‘profitable’ personal balance sheet. All financial institutions have Profit and Loss Statements and Balance Sheets to show how profitable or behind they are.

Have you done a Personal Balance Sheet? Would it be pretty? Probably not. But this is a sure fire way of starting you on the right track and keep you ‘profitable. I’ll explain what I mean about being personally profitable in another post.

Set aside 10 to 20 per cent for future needs, no matter how much debt you are in. If you have killer debt (debt against things not going up in value such as cars or televisions) you need to pay this off as soon as possible.

Have a future investment fund of 10 per cent.

Live off about 60 per cent of your income. With that discipline in place, you will pay off your killer debt.

Put aside 5 per cent for education needs (business, investment) and 5 per cent for emergencies.

People who get rid of their killer debt move into a position of control. This is the principle of how to become solvent – which simply means you have more asset than debt, a positive net worth.

For more information on becoming solvent in your financial life, visit www.solvencymakers.com

PD