Australian post-Christmas debt predicted to reach $30 billion
More than 1 in 4 Aussies will still be paying off their Christmas credit card debt in 12 months.
The average Australian credit card holder is facing up to $1,863 in post-Christmas debt according to new research from Finder. Based on an analysis of new forecast data from the Reserve Bank of Australia (RBA), Australians likely borrowed a collective $29.7 billion on credit cards in December 2018. That's a lot of Christmas presents!
Based on how long Aussies said they would take to pay off their credit card in 2018, it's expected that the interest alone will cost Aussies $237 million. Plus, 27% of cardholders will still be paying off their 2018 Christmas credit card debt by January 2020.
To avoid forking out massive interest costs, you should aim to repay your credit card sooner rather than later. If you want to clear your Christmas debt and pay no interest, you could transfer it to a card with 0% on balance transfers. Currently, there are credit cards on the market that offer 0% on balance transfers for up to 26 months.
Depending on the size of your debt, you could save hundreds or thousands of dollars in interest with a balance transfer credit card. Plus, it could help you repay your debt sooner without the weight of interest costs.
If you have multiple credit cards, you can also consolidate your debts and move them to one card with a promotional 0% interest rate. However, some credit cards have balance transfer limits and you can only transfer up to a percentage of your approved credit limit (such as up to 80%).
As an example, if the card has an 80% transfer limit and you're approved for a $10,000 credit limit, you could transfer up to $8,000. If your debt is larger than this transfer limit, the remaining amount will stay in your old account and continue attracting interest.
This is especially important to remember considering the stricter credit limit assessments that have rolled out from 1 January 2019. You can learn more about how this could impact your balance transfer in this detailed guide.
However, even with balance transfers, all good things must come to an end. After the introductory period, any remaining debt from the balance transfer will collect the revert interest rate (which is usually the cash advance rate). To get the most out of your balance transfer, make a repayment plan and aim to pay your balance in full before the introductory offer ends.
If you want to get your post-Christmas debt under control, you can start comparing interest-free balance transfer credit cards on Finder.
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