Published on November 16, 2015 9:31 am, by Jen Bakker
Australians have an exorbitant amount of Credit Card debt, apparently more that $50 billion of it. Reducing your credit card debt takes real commitment. Here’s 5 steps to get you on your way –
1. Understand your debt. Take the time to go through your statements. Calculate your annual fees, your interest rates, your minimum repayment and how much your debt is increasing or decreasing each month. Use MoneyBrilliant to understand your fees and charges, set up bills and alerts to help you make payments on time and alleviate any late fees you may be paying.
2. Make a plan. Choose one card to repay first. Set a goal and work out how you are going to meet the repayments. Consider how long each card will take and which one you should choose. The lowest debt may take the least time and give you incentive to continue with the next card once you’ve repaid it. Alternatively you may choose the card with the higher interest rate and decrease your interest charges. Have a chat to your bank and ask them about a lower interest product or if they can help you in any way.
3. Consider Balance Transfers and consolidating debt. Many finance providers offer low interest offers for a set time period. Balance transfers are an effective way to repay debt where you can commit to a certain amount each pay cycle. Be aware these cards often have high interest rates on purchases and also after the low interest period but they’re great if you intend to not purchase on them. Make sure if you transfer one or more of your cards across to this facility that you cancel & close them.
4. Spend less. You need to find some extra money to put towards repaying your credit card debt, and the only way to do this is spend less. Consider your weekly spend, what can you give up that will help you meet your goal of repayment? Are there any services you pay for, lunches you buy or trips out that you can sacrifice for a while? It’s an expensive time of year, feel free to check out our 7 gift ideas that won’t break the bank.
5. Commit to checking in and think long term. Let’s be honest, it’s easy to spend money! Check in on your spend as often as you need to. Diarise it. If you have managed to save some money at the end of the week, sweep it straight across to your debt. Think about your future and remaining free of credit card debt for life. Should you have a credit card at all? Have you considered a debit card? If you want a credit card, check out the rates & fees available and choose one that best suits your needs and that you can commit to repaying monthly.
Jen is an experienced banking professional who loves wine, coffee, finding a bargain and of course her three beautiful children. Since Jen's first budget led her to buy a home at 20, Jen has passionately helped others to make better decisions with their money.