What to do if you’re struggling with credit card debt

Australia’s total credit card debt is currently at $17.31 billion dollars at the time of writing. At the average rate of 18.34%, that means over $8.8 million is being paid in interest to credit card lenders every day.

Having credit card debt may not be out of the ordinary, but if you’re struggling to pay that debt off, it’s worth taking a moment to figure out a game plan, and fast.

Whether you’re just paying off your debt via minimum repayments, or you’re using your card regularly, or maybe not even making your repayments at all - without a solid game plan, you could find yourself in major trouble.

Help if you’re struggling with credit card debt

Below are tips to help you kick your credit card debt, but if you’re struggling, you can always reach out to the National Debt Helpline (1800 007 007). This service can put you in touch with a free financial counsellor that can give you independent advice.

Tips to help kick your credit card debt to the kerb:

• Stop the leaks: Commit to not using your card until you’ve got a hold on your finances. One easyway to stop your debt climbing is to stop creating it with spending.

• Reduce the burn: Ask your bank to reduce your interest rate. If they don’t play ball, consider switching to a lower rate card. The RateCity.com.au database shows there are over 10 credit cards on the market offering rates under 10% at the time of writing.

• Consider a different way out: Cutting up the card and switching your debt over to a personal loan can be a good option as it will force you to pay down your debt within a set time frame without adding to it.

• Don’t swap one way of spending for another: If you kick your credit card habit, try not to sub it for a different form of credit such as buy now, pay later.

• Check you’ve got the right card in your wallet for your finances: If you are regularly getting hit with interest charges on a high rate, high fee rewards card, it could be time to switch to something that’s going to suit your finances better.

• Control your own limits: Don’t let your credit card company decide how much you can spend. Set yourself a strict limit that you know you can clear every month.

• If you slip up, ask for mercy: If you forget to pay your bill in full one month, call your provider and ask them to waive the charges. Everyone makes mistakes and if it’s a one off, they might say yes.

• Know that annual fees are optional: Credit cards often come with annual fees that run well into the hundreds of dollars. Diarise when your next annual fee is due, and ask your provider to waive the charges before you get hit with this unnecessary fee.

• Don’t use your credit card to plug a hole in your budget: It might feel like a quick fix at the time, but putting recurring expenses on a credit card can easily get out of hand. If your budget doesn’t add up, make structural changes, not temporary ones.

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