A back-up credit card 'makes sense'

Monday 15 November 2010

Article by Mozo

Having a second credit card at a separate institution can be a sensible means of managing personal finances, an expert has said.

A back-up credit card 'makes sense'

Mark Bouris, executive chairman of wealth management and advice firm Yellow Brick Road, noted that while it is illogical to have too many credit cards "and be paying fees all over the place", having one at a second institution can be a worthwhile back-up option.

However, writing for the South Australian Advertiser, Mr Bouris also accepted that it takes discipline to have additional credit available and not use it. He therefore suggested that it might not be the best option where debt problems are severe or require long-term resolution.

"Credit card and personal loan rates are much higher than mortgage rates so, if you have equity in your home and room to move on the mortgage, drawing down on it and paying out the cards is a sensible alternative," he added.

"But you don't want to keep doing it. You need to look at how you ended up with the short-term debt problem."

Consumers seeking to better manage their personal finances can choose to compare credit cards and other money products in search of the best options. Financial comparison website mozo.com.au recently launched a new Xmas Rate Rise Poll to discover how the recent interest rate hikes will affect Aussie spending this Christmas.

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