How to effectively use credit cards: 'They aren't bad, how we use it gets us into trouble'

Gugs Mhlungu spoke to resident Certified Financial Advisor, Paul Roelofse.

Listen to their conversation in the audio clip below.

We are often told about the dangers of irresponsibly using your credit card and that credit can be costly.

But there are ways you can use your credit card to your advantage.

Roelofse says a credit card need not be your foe.

"A credit card isn't a bad thing at all. It's how we use it that gets us into trouble."

- Paul Roelofse, Certified Financial Advisor

"It is a bank instrument and obviously the bank makes money out of the usage of that card and how it makes its money is the more you use it, the more interest it is going to claim from you in terms of that outstanding balance at the end of each month. Unfortunately what happens is we don't manage it too well, we kind of use it as a spontaneous spend and count the cost at the end of the month when the statement arrives."

- Paul Roelofse, Certified Financial Advisor

Roelofse adds that some people are very astute users of credit cards.

According to bankrate.com, these are the advantages of having a credit card:

• You can make purchases now, especially in the case of emergencies, and pay them off later.
• You can pay off your balance in full or pay it off over time.
• You can earn rewards on everyday expenses.
• Credit cards are easy to use and widely accepted.
• Good credit habits help you build a positive credit history and credit score.
• Credit cards can protect against fraud. If your credit card is issued by one of the major credit card networks, you can rest assured that you’re well-protected against the fast-growing problem of credit card fraud.

"At the moment credit card interest is probably the highest next to personal loans. If you are aware of that, we can actually manage it downwards and actually save us a bit of money."

 - Paul Roelofse, Certified Financial Advisor

For more financial insights, visit Roelofse's website www.investforlife.co.za

Scroll up to listen to the full interview.