5 easy ways to smash credit card debt
The pandemic has seen us all do a bit more online shopping than usual. Whether it’s buying more meal or grocery deliveries, home office and fitness equipment, or the latest ‘biz leisure’ wear for Zoom meetings, Aussies have spent up big on their credit cards over the past 12 months. So to help you get back in control, here are five simple tips to reduce credit card debt.
1. Consider a credit card with an introductory balance transfer rate
Switching to a credit card that has a low introductory interest rate (or 0% p.a. interest) on balance transfers may help you save money on interest charges, and make your payments easier to manage. Remember, that promotional balance transfer rates are usually for a set time period, so make the most it by paying off your balance before it ends.
2. Repayment tips
Paying more than the minimum amount will help you save on interest and pay off your balance faster. Since interest is typically charged on a daily basis, making two minimum payments a month will also help reduce the amount of interest you'll pay. And, most importantly, try not to miss or be late with any repayments – you’ll likely be charged late payment fees. To avoid these, set up a monthly direct debit for the minimum repayment amount.
3. Drop your credit limit
By reducing your limit, you can remove the temptation to spend more and run up more debt you may not be able to repay.
4. Out of sight and out of mind
If you want to clear your debt, well…you need to stop adding to it. Resist the temptation to spend more by leaving your credit card at home, or removing your credit card from your smartphone’s digital wallet.
5. Don’t withdraw cash on your card
Cash advances are a big ‘no-no’. Interest is usually charged immediately and can be higher than the interest rate for normal purchases. There’s also a cash advance fee to watch out for.
Getting on top of credit card debt can be hard, but by following these five tips you can get your finances back on track.
Please note: This is only intended as a general guide in relation to issues you may want to consider when attempting to reduce your credit card debt. It is not intended to be an exhaustive list of all relevant issues and you should take into account your own particular circumstances, and obtain independent expert advice where needed, before proceeding.