How Much Credit Can I Afford?

Featured Affordable Credit Card

The St.George Vertigo MasterCard is the low rate shopping credit card which features some very attractive introductory benefits that you can take advantage of immediately. For a very low annual you receive an amazing introductory purchase rate plus instant shopping benefits with St.George Bank’s range of fantastic partners.

• $55 annual fee
• 12.49% p.a. on purchases
• 2.99% p.a. for 6 months on balance transfers
• Cash Advance Rate of 21.24%
• Canstar Cannex 5 star rated card

Click here to read the St George Vertigo terms and conditions

The question of how much credit an individual can afford can only be answered by offering some guidelines and advice. From there, each person has to make their own assessment. If your name is Bill Gates, your answer will be very different to the one given to … pretty much anyone else in the world.

How much credit is right for me?

How much credit you can afford is down to your own personal financial situation, and for many people that means it is pretty fluid. Even if your income is the same each month, your outgoings can fluctuate through no fault of your own. Your car may need repairs; a couple of big insurance policies may need renewing; a domestic appliance may need replacing. All of these things can affect how much credit you can afford to tap each month.

Do not make the mistake of assuming your bank or credit card provider has a good idea how much credit you can afford. You may have been given your credit card when times were much better than they are today, therefore your credit limit could be far higher than your current finances really warrant. Should you go by that figure now and spend up to your limit you might end up in serious financial straits very quickly. Or it could be that you have applied for a credit card recently and have been given a very healthy credit limit to play with. Just bear in mind that your credit limit is based on the figures you gave to the credit card provider. Some people do not offer all the facts when making credit card applications. If you are one of these people, then your credit limit may not reflect your true ability to pay it off.

You can only really know how much credit you can afford by sitting down and drawing up a map of your finances. That will include your income and all your outgoings. The best plan is to underestimate your income, and overestimate your outgoings. Remember that when you access a large amount of credit one month it may take several months to pay it off, therefore any large outgoings in those next few months must be taken into account as they will impact your available funds.

Unless you have a large purchase on the horizon that is completely unavoidable, then the fact that you are asking how much credit you can afford might indicate some flawed thinking. What you may actually be asking is “how much financial trouble can I get myself into?”

• Comparison of Top 10 Credit Card Offers

Editor's Choice: Our Top Credit Cards

Credit Card	Card Details	Interest Rate (p.a.)	Cash Advance Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual fee	Interest free days (up to)
HSBC Credit Card	Editor's Choice: 0% for 6 months Balance Transfer & No Annual Fee Featuring a $0 annual fee for life, and 0% p.a. balance transfer for 6 months, the HSBC Credit Card was voted the Best Transactor Credit Card for 2010.	16.99%	20.75%	0% for 6 months	$0	55
Suncorp Clear Options Standard Visa Card	A great 12 month balance transfer offer, combined with a low annual fee and a good interest rate on purchases.	12.24%	17.99%	1.9% for 12 months	$39	0