6 Tips for Managing Credit Card Debt

People’s credit card debt balances and the reasons why they borrow money vary widely. In Australia, credit card debt is among the most prevalent. Almost half of all Australian adults have credit card debt. The interest rates charged on credit cards vary greatly amongst banks as well. Some credit cards have interest rates as high as 22%, while others have rates as low as 5%. Some banks also offer interest-free credit cards, which shows that lenders are starting to see the problems with paying interest on unsecured debt and how often it is used.

What happens if credit card debt is not paid in Australia?

 Your credit rating may be impacted if you fail to pay off your credit card debt. Debt collectors or banks will keep calling and trying to get their money back if the debt is not paid back. These calls can make you feel even more overburdened because they are relentless. Your mental and emotional health may be seriously affected if you cannot devise a plan. Getting help or assistance as soon as possible is the best solution for situations like these.

Tips for Managing Credit Card Debt

• Minimise Unnecessary Purchases: Stop using your credit card for everything but necessary purchases. As you work on your plan, try to avoid using your credit card and instead pay with cash wherever possible.

• List down your expenses: Although it may seem simple, start by jotting down how many credit cards you are using and the interest rate you are paying each. Then make a list of every dollar spent (debts and expenses), including money for food, rent or a mortgage, credit cards, power, phone, and transportation. List all of your monthly revenue, including salaries and other compensation.

• Lower your credit Limit: Request your credit provider to lower your credit limit to minimise the temptation to use your card excessively. You can do this online by calling or stopping by a branch. The typical wait time is one to two business days. If you need to boost your limit to buy anything special, try to pay it off as soon as possible. Then decrease your limit once more to a manageable level.

• Pay Minimum Credit: If you can’t pay a card off, try to pay more than the minimum every month to pay off the balance faster and avoid paying interest. Setting a direct debit to pay a certain amount on your payday can be beneficial. Additionally, to make it simpler for you to manage your finances, once a card has been paid off, you should delete the account and strive toward having only one card.

• Transfer Credit: If you think your interest rate is too high, you might want to move any outstanding debt to a credit card with a lower rate or combine it with an existing personal loan or mortgage, which sometimes have lower fees and interest rates.

• Debt Consolidation: Consolidating debt as one payment is an additional choice. You can use a single loan to pay your debt off and eliminate debt. Both debt consolidation loans and balance transfer credit cards are options for achieving this.

Debt Free Australia will give you unbiased advice tailored to your debt situation. Please contact us if you are looking into personal credit card or debt solutions and want to speak to an expert. Our toll-free hotline is open around-the-clock. Call us whenever it is most convenient at 1800 676 598.

Experiencing personal financial difficulties and need some debt relief? Debt Free Australia has got you covered. We offer a range of solutions that will help you get debt relief so that you can prepare for a better financial future.

Debt Relief Solution 1: Debt Agreement

A Debt Agreement refers to an arrangement established between the debtor and his or her creditors. It is a formal settlement whereby the debtor agrees to pay a proposed sum to creditors over a certain period of time. It usually runs from 3 to 5 years.
The value of a Debt Agreement comes in its ability to give the debtor some breathing space from creditors hassling them to pay their obligations, providing some much-needed debt relief. It enables them to work out an agreement in which all parties are satisfied. Debtors usually pay less than what is owed, and the whole balance is written off.
In order to be eligible to enter into a Debt Agreement, your finances must not surpass the requirements established.

Debt Relief Solution 2: Personal Insolvency Agreement

A Personal Insolvency Agreement is similar to a Debt Agreement in the sense that an arrangement is set up between a debtor and his or her creditors. It provides debt relief to people because it enables the debtor to pay back their fees without creditors constantly harassing them.
If your finances exceed the thresholds for a Debt Agreement, then you are no longer eligible to enter into a Debt Agreement, and must enter into Personal Insolvency Agreement.

Debt Relief Solution 3: Bankruptcy

Another debt relief solution is Bankruptcy. However, there are serious consequences to Bankruptcy and so it must only be considered as a last resort.
Bankruptcy lasts for 3 years after your Bankruptcy application form, Statement of Affairs, is lodged and accepted by the Australian Financial Security Authority (AFSA). Most personal assets will be sold in Bankruptcy, with only a few exceptions such as most essential household goods and motor vehicles and tools of trade under a certain amount.

If you are looking for advice personally tailored to your situation about any debt relief solutions, then please contact Debt Free Australia. DFA are passionate about helping Australians get out of debt and prepare for a better financial future. Please contact us on our 24/7 toll-free hotline on 1800 676 598 to speak to one of our friendly and professional debt relief consultants.