Have you built up any credit card debt lately? ASIC’s debt clock shows the average Australian
owes just a tad over four thousand dollars in debt, which equates to around seven hundred
dollars in interest repayments a year. And with the silly season now behind us, we
thought it was a good time to arm you with some tips which could help you pay down your
credit card debt. Tip 1 is to get rid of any extra cards you
have. Most credit cards come with a handful of fees
and charges, so logically, the more cards you have the more fees you will generally
pay. By consolidating your debt onto one single
credit card, you can more easily keep track of what you owe without having to worry about
extra interest charges. This leads us into our next tip, looking for
a card with a great balance transfer offer. If you’re transferring your balance, it’s
generally a good idea to pick up a credit card with a low introductory rate. Many providers offer credit cards with introductory
rates as low as 0 percent for a period of time, sometimes for more than twelve months. If you move your debt into a credit card that
comes with a 0 percent introductory rate, you can pay off your debt interest-free, as
long as you do so within the specified timeframe and continue to make your monthly repayments. Do bear in mind, though, that some providers
may charge you a balance transfer fee when you make the switch to their card. If you can’t get a balance transfer, tip
3 is to choose a low rate card. The lower the interest rate the better, as
this means more of your payments are going towards clearing your existing debt, rather
than towards paying interest. At Canstar we rate credit cards with purchase
rates as low as 8 percent per annum, although you’ll need to look at the fees and charges
on these cards to get a true idea of the costs you can expect. Tip 4 is to consolidate your credit card debt
into a personal loan. This is a much more structured way of clearing
your credit card debt, as you agree to a maximum loan term to ensure the debt is repaid within
a specified period, if you make all your repayments on time. Personal loans also usually offer a lower
interest rate than most credit cards, and you can typically find out if you’ve been
approved by financial institutions very quickly – mostly within 1 – 3 business days. And finally, tip 5 is to make repayments that
are higher than the monthly minimum. Credit lenders usually set the minimum repayment
per month at around 2 to 3 percent of the balance. But you’ll find even paying off an extra
forty to fifty dollars each month can make a big difference to the amount of debt you
owe. Whatever option you choose, you can only benefit
from proactively taking steps to get on top of your credit card debt. And remember, you can also compare your credit
card options to see if you can find the best product for your needs at Canstar.com.au.