4 Ways to get your credit card debt in control this year

Christmas is over for another year, but many Aussie credit card holders are still stuck with a debt hangover.

According to finder’s analysis of Reserve Bank of Australia (RBA) data, Aussies borrowed a combined $29 billion on credit cards in December 2017. That averages out to $1,727 in purchases per credit card. Based on the average 55-day interest-free period, the predicted interest alone accrued during the Christmas period is $230 million.

If you’re struggling to get your credit card debt in control, these four tips can help you reach your financial goals in 2018.

Make a repayment plan

The first step to getting your credit card back in shape is creating a plan of attack. This could involve a making repayment plan and calculating how much you’ll need to pay each statement period to clear your debt by your goal date. Once you’ve determined how much you need to pay, you can use calendar reminders and automatic direct debits to stay on top of your repayments.

Pay more than the minimum amount

Although you’re only required to pay the minimum repayment amount (usually 2% or 3% of your total balance), you should aim to pay as much as you can each statement period.

While it’s ideal to pay your balance in full each month, if you can’t do this, you should at least try to pay as much as you can, rather than just sticking with the minimum amount. Otherwise, your debt will continue to grow and become even more difficult to pay off.

You can use MoneySmart’s repayment calculator to see how long it will take you to pay off your card with only the minimum repayment and how much you could save if you made higher repayments.

Consolidate multiple debts

If you have more than one credit card and you’re struggling to pay down the separate balances, you could also consider consolidating them with a lower rate credit card.

When you request a balance transfer, you can usually nominate to move debts from up to three (although sometimes more) different accounts. You’ll just need to need to include each of the account details in your application.

Most banks will allow you to transfer between 80% and 100% of the maximum credit limit. So if you have a credit limit of $15,000 and a balance transfer limit of 80%, you may be able to transfer up to $12,000 to the new card. Check out MoneySmart’s guide to paying off multiple debts for more tips.

Avoid making new purchases

If you’re concentrating on paying off your post-Christmas debt, you shouldn’t be using your credit card to make new purchases.

And if you do use a card for purchases, learn from your mistakes and make it your goal to pay off your balance in full each statement period in 2018.

Although each of these strategies is useful, there is no one best strategy for every Aussie credit card holder. Instead, consider your financial situation and your personal goals and compare your options to reign in your credit card debt in 2018.