Save money: Study your credit card spending habits

Like a set of keys, no credit card fits all, that's why it's important to take into consideration your spending habits when considering your next credit card. CANSTAR released its credit card star ratings report in September 2013 profiled around four types of spenders.

Let's take a look at four spender profiles and see which category you fall into and what this means about the type of credit card that would suit you.

The Big Spender

As the name suggests, you are a big spender forking out over $5000 per month. But you are also a conscientious spender who always has his credit card debt paid off in full each month. Perhaps you use your credit card to gain reward points, or for the convenience, but you have money in your savings account to always pay it straight off.

Look for: Platinum credit cards may be your best bet because they reward big spenders with lots of perks. These could include frequent flyer points, reward programs, travel insurance and even hotel accommodation deals. Note: Platinum credit cards come with higher interest rates and fees.

The Everyday Spender

You use your card almost every day to do your grocery shopping, buy purchases online or pay your bills, but are tedious when it comes to paying off your credit card balance on time each month. You monthly spend comes in at around $2000 per month.

Look for: A middle of the range gold card may be a great option for you. While this card comes with higher interest rates and fees, the extra rewards will offer you some great benefits including travel insurance, extended warranty on purchases, frequent flyer points and shopping perks. It doesn’t have to be gold just keep an eye out for a credit card with great interest-free days, sensible annual fees and a reward program that suits you.

The Occasional Spender

Your credit card is not an accessory but rather a necessary financial tool. You use it to order large purchases that you don’t have the money upfront for and pay it off over an extended period.

Look for: An occasional spender has to be a smart spender. Keep an eye out for low interest, or no interest, credit cards with low annual fees, so you can pay off your purchases over time without being stung with high interest rates. Beware, most low interest credit cards offer a lower rate for the introductory period so make sure you commit to paying off your entire debt during this period because afterwards the interest rates will spike, making it much harder for you to pay it off.

The Habitual Spender

Interest, what’s that? Habitual spenders use their credit card like they do their debit card and are constantly incurring interest and paying off debt.

Look for: Low interest rates and low, or no, annual fees are imperative for the habitual spender. You might have to give up the rewards associated with higher spending credit cards but if you shop around you might find some that offer discounts at places you frequently shop at.

Selecting the right credit card for your lifestyle is extremely important. Find a card that fits your spending needs, and don't select a credit card with a bunch of added extras unless you truly need them. You could be paying a high annual fee for services and features which you don't require.

At RateCity you can compare all types of credit cards to find one that best suits your spending profile. 

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