Do you love the ease and convenience of a credit card but worry about mounting debt? If so, you are not alone.
As of February 2022, there are over 13.1 million credit cards in circulation in Australia, while the average balance per credit card – that is, the amount of money owed – is $2,828. Based on these figures it’s clear that despite how popular credit cards are, they can become a source of financial stress for those who struggle to repay their debts.
The good news is, there are a few ways to reduce your credit card debt, including your associated costs like account fees and interest rates.
1. Pay off high interest debts first
If you have more than one credit card debt, pay off the higher interest debts first, as it will reduce the overall amount of interest you pay. Keep in mind, you will still need to keep up the minimum payment requirements for your other credit card debts, but the amount you save will be worth the effort.
2. Credit card balance transfer
One way to manage your credit card debt is to consider a credit card balance transfer. How does this work? Put simply, you transfer the debt from your current credit card to a new credit card, one that has a low-to-zero interest introductory period.
While this is an effective way to reduce your credit card debt, there are a few risks. For instance, you may need to pay a fee to close your current account and set up the new account. Also, if you do not pay off the debt during the introductory interest period, there is a chance the full interest could be higher than the previous one.
3. Pay off smaller debts first
Paying off your smaller credit card debts first is a great way to keep you motivated. Once you’ve paid off this debt, you can then move on to the next one. Of course, if you have higher interest debts on the table, consider dealing with those first.
4. Credit card consolidation
If you have multiple credit card debts and struggle to manage them, consider a credit card consolidation. This is where you bundle all your credit card debts into one single monthly payment, making it easier to manage and can potentially save you money on interest payments.
5. Pay more than the minimum monthly amount
If possible, try to pay off more than your minimum monthly amount. By doing so you will pay less total interest, clear your balance sooner, and free up your budget to focus on other more pressing debts. Create a budget and see where you can save in order to pay off your credit card debts sooner.
6. Consult a debt management firm
Do you have multiple credit card debts and are struggling to repay them? If so, then consider reaching out to a debt management firm for expert confidential advice and support.
Your debt advisor can assess the circumstances of your credit card debts, your income and expenses, and the reason behind your financial difficulties. From there, they can negotiate with creditors and consolidate your debts into one single monthly payment, giving you a better chance of paying them off.
Aside from giving you a complimentary, no obligation debt analysis, a debt management firm can help you take control of your credit card debts and save money on interest payments. Best of all? There is no upfront charge or commission fees to receive this help and support.
