Jeremy Tauri: Credit card silly season

The Christmas season can wreak havoc on your credit cards.

Gifts, work functions and client entertainment will see Kiwi businesses forking out billions of dollars over the weeks between now and Christmas.

Our purchasing habits see us using less cash and more facility these days, with credit cards accounting for $4 billion in core retail spending in September alone. You may already be a regular user of a credit card and there's nothing wrong with that. What's important is ensuring you're using your card wisely.

Interest rates for credit cards can be up around 20 per cent per year. The rates are so high because it's unsecured lending. Don't expect rates to fall as the OCR and mortgage rates have.

My wife and I have eight credit cards between us. Three are business and five personal, with different limits and rates depending on our purchases.

Three banks have provided us credit cards, two of which we don't use. I think we are only keeping them in case we want to buy each other gifts, or to cover some unexpected expense.

We've been married 3 years and still these cards are unused - we've been fortunate to have no financial surprises but less fortunate that we haven't bought any mystery gifts.

If you do have some spending on the cards its important to remember the following.

1. Always keep card details private and if you lose your card put a hold on it immediately. Check statements regularly.

2. Don't commit to just pay the minimum 5 per cent or 10 per cent of the balance suggested by the statements you receive. Always aim to pay the balance due. Reconsider spending habits if you cannot pay it in full.

3. Use points and rewards but don't let this drive your spending. Even if you have a business credit card it's possible to accumulate points. See which of your suppliers accept credit cards, there might be easy rewards. Carefully weigh up the cost of these schemes, though. Some cards cost more to have than the points offer you.