Controlled use of credit cards 'leads to happy finances'

The use of credit cards is at the heart of many Australian's debt problems, according to new research.

A study by Smart Money - on behalf of the Adelaide Advertiser - found that many people who used credit cards for emergencies only - and also able to pay off goods before the interest-free period expired - were on top of their finances.

Meanwhile, those consumers who used their credit cards for the majority, or all, of their purchases, were most likely to find themselves in financial strife.

The study - which questioned a number of people around the South Australia capital - found that many who over-relied on their credit cards found themselves unable to keep up with the monthly repayments, as well as the interest demanded by the credit card companies.

MyBudget director Tammy May, who organised the survey, said: "If there's a change in their circumstances and they're unable to make that repayment or they miss some payments, all of a sudden that no interest, no repayment term is gone and they can get charged the interest for the entire time from the date they purchased it, and it has a snowballing effect.''

AMP financial planner Darren James stated that good budgeting was the key to financial success, not how much you earn.

"Quite often you see people that have been on low incomes that have managed their money so much better than someone on a very high income and they've got a lot more to show for it."

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