A CREDIT card is not a debt machine – it is financially dangerous to recycle debt with it.

Matthys Potgieter, debt expert and spokesman for DebtSafe, said people who use their credit cards to pay off debt get trapped in debt.

“Banks would not reward you with an interest-free period if they didn’t want you to pay back the money that you spent.

Potgieter said people must remember that their monthly instalments are made up of the minimum amount you must pay back and the interest added to the money or “capital” you spent.

“Every time you pay a monthly instalment but spend it again, you reach your limit quicker than before and have to pay back more interest on the total spend.”

“If you have a R10 000 available balance on your credit card and have spent R1 000, you will owe R700 as capital and R300 in interest. If you spend another R1 000, you will owe an extra R330 in interest and R670 in capital. Your available balance drops to R9 700.”

- Always work out your monthly budget and what amount you need to pay back.

- Credit cards have a 50 to 55-day interest-free grace period but only if you pay the money back in full.

The free-interest period means that the credit is to be used to manage cash flow only.

- The instalment is for interest, capital and monthly service fees.

- A credit card’s amount should not be more than you need for day-to-day expenses.

This way you won’t overspend and will pay your credit back in full and avoiding interest.

When you are paying off one credit card with the other, you are generating two separate accounts of debt to pay off.

Recycling debt means you will also run out of credit faster than you can pay it back.

“You will get sucked into a downward spiral of debt which will make your problems even worse!”

Talk to your banker and financial planner to advise you about debt and credit card management.

If, however, you are already stuck in a bad mess of debt, SMS your name and INFO to 30898 – the SMS is free. DebtSafe offers a free debt assessment as well as advice on how to fix your debt problem.