Australians have racked up $29 billion in Christmas credit card debt
The average Aussie credit card holder has a holiday debt hangover of $1,727.
Although the Christmas decorations have been packed away, Aussie credit cardholders are still burdened with the debts from their generosity over the festive season.
According to a new forecast of Reserve Bank of Australia (RBA) data analysed by finder, Aussies borrowed a combined $29 billion on credit cards in December 2017. That breaks down to an equivalent of $1,727 in purchases per card. This is up from the $1,666 the average cardholder owed in credit card debt after the Christmas period in 2017.
Based on the average 55-day interest-free period, it’s predicted that the interest alone from the Christmas haul will cost $230 million collectively. So the quicker cardholders repay their holiday credit card debt, the less interest they’ll accrue. Four out of five card holders (81%) plan to pay off their debt in three months or less. The remaining 19% will take longer than three months to service their debt, with 5% taking a year or more to pay down their balance.
That means that some people will still be paying off last year’s Christmas debt come January 2019! Not only does this mean that some Aussies will have a cloud of debt following them until the end of 2018, it also means that their interest costs are likely to pile up.
If you can’t pay off your current Christmas balance in full and think it could take months or years to get your debt under control, it might be time to consider a 0% balance transfer credit card. You can use these cards to transfer your existing debt (or debts) to a new one with 0% on balance transfers for a promotional period up to 26 months. This means that you’ll have more breathing room to pay off your debt without accruing any interest, allowing you to potentially save hundreds or thousands of dollars.
For example, let’s say you have the average post-Christmas debt of $1,727 and a current interest rate of 20.74%. If you opted for a card with 0% on balance transfers for 24 months, no balance transfer fee and a $90 annual fee, you could save $368.89 in interest if you cleared the debt by the end of the promotional period. This is just one example, but you can use the balance transfer calculator on finder to discover how much you could save if you pay your Christmas debt with one of these cards.
There are currently more than 100 credit cards offering 0% balance transfer promotions on the market, so there are plenty to compare. To find the right offer for you, make sure you look at the length of the promotional periods and how much you could save. Also consider any annual fees, balance transfer fees or other costs that could impact your overall savings.