How it can work in the real world: Anthony’s new credit card

A return to the life of our made-up NAB customer Anthony, who’s just got himself a new credit card. How will it change the way he looks after his money?

When we first took a look at How Anthony manages his money, he had a simple two-account banking set-up and a budget that left him a spare $300 a fortnight.

But after getting a decent raise and spotting a new $1,200 couch that he wants to buy, he’s decided to get a credit card. Here’s a look at what he has to know as he chooses his new card, uses it, and pays it off.

Anthony’s choice of credit card

Anthony started with Important questions to ask when you’re choosing a credit card .

Because he’s not going to be a huge spender on his credit card, and because he’d rather keep his costs down than get a card with extras, Anthony didn’t go gold or platinum. That left a few options, though.

Being pretty good at budgeting and self-control, Anthony isn’t expecting to have large credit card balances that he can’t pay off. That means he doesn’t need a low rate card. And since he’s a flybuys member, he’d like to earn points on his credit card purchases. All of this makes the NAB flybuys Rewards Card a good fit.

Making the most of flybuys rewards

When Anthony applies for his new NAB flybuys Rewards Card, he includes his flybuys membership number. That means that his new card is all ready to earn him flybuys as soon as he gets it in the post.

When Anthony makes purchases with his new credit card, he earns flybuys points (the new couch alone will earn him over a thousand points). And with the option of turning his points into credit that goes back on his card, it could even pay for its own annual fee.

Making the most of interest-free days

Anthony knows how his interest-free days work, so he’s buying the couch for $1,200 at the beginning of his statement cycle. Anthony’s NAB flybuys Rewards Card gives him an interest free period of up to 44 days. His interest free period starts on the first day of his statement cycle and ends on the day his credit card payment is due. By purchasing the couch at the start of his statement cycle, he’ll receive three fortnightly pay packets between buying the couch and paying off his credit card.

On each of those three pay days he’ll transfer $400 to his iSaver account. Then he’ll have saved $1,200 in time to pay it back onto his card and avoid paying interest.

Getting rewarded for paying bills

When we last caught up with Anthony, he made automatic payments from his NAB account towards his bills each pay day. But now that he has a credit card, he can earn flybuys points by using it to pay bills through BPAY. And the easiest way to use BPAY is through NAB Internet Banking.

It’s up to each company (or biller) to decide whether they accept credit card payments. They also decide whether to treat your payment as a cash advance or a purchase. (If it’s going to be a cash advance, we won’t let Anthony use his credit card.) By checking his billers on the BPAY website, Anthony finds out that he can pay his power and telco bills, but not his rent, by credit card.

So instead of making fortnightly payments directly to his telco and power company, he automatically transfers the same amount of money into his iSaver. While the money’s there it earns him interest. Then when a bill comes in, he goes online and uses his credit card to make payments through BPAY.

When his credit payment’s due each month, the money that he’s set aside every two weeks helps cover the bill amounts that he has charged to his card.

  • Why use his credit card? To earn flybuys points and to take advantage of interest-free days.
  • Why use BPAY? To avoid paying a fee and avoid interest. Putting a bill on your credit card without using BPAY can count as a cash advance, which means paying a fee and being charged interest at the cash advance rate – one of the five types of credit card interest. So he’s really careful about this.

Managing regular spending, payment reminders, and monthly payments

Anthony also uses his credit card for his groceries each week, so he needs to make sure that he sets enough money aside to cover this when his credit card payment is due each month.

He needs to pay the full amount to avoid credit card interest. Anthony knows only making the minimum payment on his statement, or making part payments of his closing balance, will cost him interest.

So after each trip to the supermarket he logs into NAB Internet Banking and shifts the amount he’s just put on his credit card from his everyday Classic Banking account to his iSaver.

The final piece of the puzzle is remembering to make his payment on time. By setting up a credit card payment reminder in NAB Internet Banking, Anthony makes sure that he receives a free SMS from us a few days before his payment is due.

When that text comes through he takes the money from his iSaver and transfers it (through his linked everyday account) onto his credit card. That means that every month Anthony:

  • earns flybuys by using his credit card for major purchases like his new couch, bill payments, and regular spending like groceries; and
  • earns interest with the money that he transfers into his iSaver while he waits for his credit card statement cycle to end; and
  • avoids being charged credit card interest by using his savings to pay his full credit card balance each month.
  • Avoids a late payment fee by always paying his statement by the due date.

Making change

If Anthony finds his circumstances have changed, he knows he has the flexibility of changing the limit on his card – either up or down, whatever suits his needs.

And if he decides to go overseas, he’ll want a card with more benefits like travel insurance thrown in. He can easily change to a different card.

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