Reduce Credit Card Debt

How to eliminate debt on your credit card using debt consolidation and balance transfer credit cards

Credit card debt is on the rise in Australia with about 33 billion dollars of debt accruing interest. It is an ongoing concern that Australians must deal with. Part of the problem is that people apply for a rewards card with all the added features and then use it to make their everyday purchases, thus treating the card as an ongoing loan. These consumers would be much better off transferring their balance over to a new low rate card in order to become debt free.

What is credit card debt?

Credit card debt occurs when an outstanding balance is not repaid by the payment due date. Credit card debt incurs interest on new purchases immediately and can be very costly if not managed effectively. If you have credit card debt you may like to explore your debt consolidation options here to alleviate your debts and improve your financial situation.

Long Term Balance Transfer Credit Cards Comparison

Rates last updated February 20th, 2017
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Balance transfer rate (p.a.) Purchase rate (p.a.) Annual fee Interest Saved
NAB Premium Card
Benefit from premium credit card advantages including travel insurance, Platinum Concierge Service plus 0% p.a. for 24 months on balance transfers.
0% p.a. for 24 months with a one off 3% balance transfer fee 19.74% p.a. $90 p.a. Go to site More info
HSBC Platinum Credit Card
Receive a full annual fee refund and save $149 if you meet the $6,000 spend requirement. Enjoy a balance transfer offer and platinum card benefits such as complimentary insurances and concierge services.
0% p.a. for 15 months 19.99% p.a. $149 p.a. Go to site More info
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
Offers 0% p.a. interest rate on balance transfers for 18 months to help you manage your existing credit card balance. Earn 2 bonus Velocity Points in the first 3 months.
0% p.a. for 18 months 20.74% p.a. $64 p.a. annual fee for the first year ($129 p.a. thereafter) Go to site More info
Citi Rewards Credit Card - Platinum Card
Take advantage of the introductory long term balance transfer offer and reduced annual fee in the first year.
0% p.a. for 24 months with 1.5% balance transfer fee 20.99% p.a. $49 p.a. annual fee for the first year ($149 p.a. thereafter) Go to site More info
ANZ Platinum Credit Card - Exclusive Offer
Receive a low introductory offer of 0% p.a. on purchases for 3 months and 0% p.a. on balance transfers for 12 months. Also, enjoy an annual fee waiver in the first year.
0% p.a. for 12 months 0% p.a. for 3 months (reverts to 19.74% p.a.) $0 p.a. annual fee for the first year ($87 p.a. thereafter) Go to site More info
American Express Essential Credit Card
Receive a $50 credit on eligible spend and get Smartphone screen insurance combined with a no annual fee for life card. Also enjoy a 0% p.a. balance transfer rate for 12 months.
0% p.a. for 12 months with 1% balance transfer fee 14.99% p.a. $0 p.a. Go to site More info
Virgin No Annual Fee Credit Card
No annual fee credit card with $100 cashback and a long term balance transfer offer of 0% p.a. for 18 months with 2% balance transfer fee.
0% p.a. for 18 months with 2% balance transfer fee 18.99% p.a. $0 p.a. Go to site More info
Citi Simplicity Card
Take advantage of the 0% p.a. for 15 months offer on balance transfers, a low interest rate on purchases, an annual fee waiver for life, plus 5% cash back on retail purchases.
0% p.a. for 15 months with 1.5% balance transfer fee 19.99% p.a. $0 p.a. Go to site More info
Bankwest Breeze MasterCard
Enjoy an introductory rate of 0% p.a. on balance transfers for 21 months (2% balance transfer fee applies). Limited time only.
0% p.a. for 21 months with 2% balance transfer fee 12.99% p.a. $59 p.a. Go to site More info
HSBC Low Rate Credit Card
This card comes with a balance transfer offer, a low interest rate and up to 55 days interest-free on purchases.
0% p.a. for 15 months with 2% balance transfer fee 13.25% p.a. $55 p.a. Go to site More info
NAB Low Fee Card
Enjoy a low annual fee card with a low introductory rate of 0% p.a. on balance transfers for 18 months.
0% p.a. for 18 months with 3% balance transfer fee 19.74% p.a. $30 p.a. Go to site More info
Bankwest Breeze Platinum MasterCard
A Platinum card offer with a 0% p.a. for 21 months on balance transfers and $0 on foreign transactions. Limited time only.
0% p.a. for 21 months with 2% balance transfer fee 12.99% p.a. $99 p.a. Go to site More info
NAB Low Rate Credit Card
The NAB Low Rate Card offers 0% p.a. on balance transfers for 18 months. This card also comes with a low annual fee.
0% p.a. for 18 months with a one off 3% balance transfer fee 13.99% p.a. $59 p.a. Go to site More info

How to use a 0% balance transfer to manage post-Christmas debt


Hands with an empty wallet and credit cards on top of a wooden table

Guide to Credit Card Debt

Credit card debt which goes unmanaged and becomes uncontrollable turns into a bad debt. It is a debt which is not increasing in value, is not allowing you to purchase an appreciating asset, but is instead costing you money in interest charges and monthly payments.

Many Australians have more than one credit card with an outstanding balance, sometimes several cards have balances of thousands of dollars in purchases, purchases which were made using the bank’s money, and which now has to be paid back with interest. If you can repay your credit card balance in full before the interest free days available on your card expire, you can avoid these interest charges. However, most people don’t pay off their balance in full each month, and as a result are being charged as much as 18% or even 20% interest on their purchases.

Australians struggling with credit card debt need to take control of their behaviour, before they can hope to control their debt. Cut out the habits which encourage you to overspend, like paying with credit, and replace those purchases on plastic with a debit card. A debit card acts like a credit card, except it accesses your own funds so there are no interest charges and no monthly payments. To cut down on the interest you are paying on your credit card debt, transfer your debt to a low interest or 0% interest card to make your debt more manageable.

Is paying only the minimum monthly balance each month ok?

As you accumulate more credit card debt and the balances on your cards increases, you may be pleasantly surprised that your monthly repayments don’t seem to be too unmanageable. That’s because the minimum monthly repayments calculated on your credit card balance are only repaying a small percentage of your balance, the rest is going to pay off interest charges. Credit card companies used to calculate monthly repayments as 3 to 4% of the card balance, but many have dropped to charging as little as 1.5%, so your credit card provider can keep you in debt as long as possible.

As soon as your credit card begins to accumulate interest you need to be diligent about paying off your balance before your credit card debt builds and builds. Don’t fall into the trap of spending more on your credit card that you can afford to repay, and don’t be lulled into the habit of just making the minimum monthly payments on your credit card because you will be stuck with that debt for much longer.

Understanding how your credit card repayments are calculated can help you regain control over your debt, and seeing just how long it will take you to repay your debt making only the minimum payments will be enough to inspire you to budget to pay off more each month.

Example of how much interest you could pay

For example, the breakdown of $1,000 credit card balance and repayment schedule looks like this:

  • If you have a $1,000 balance on your credit card, your monthly repayment will be on average, 2.5% of your balance, so you pay $25 a month.
  • Your payment actually breaks down to cover $13 in interest, with only $12 going towards your balance.
  • Making the minimum payments at this rate, it will take you 11 years to pay off your $1,000 debt.
  • In those 11 years you will have paid $860 in interest – this is almost double the amount of your original debt.
  • On a $10,000 credit card debt you are committed for even more money, over a much longer period:
  • Making the minimum monthly repayment on a $10,000 credit card balance will see $133 a month go to interest and just $155 go towards paying down your balance.
  • Paying just the minimum each month, it will take you 27 years to pay off your original $10,000 balance.
  • During those 27 years, you will have paid $11,000 in interest – that’s a total repayment value of more than twice your original balance.

By simply doubling the monthly repayment amount in both these examples, to $50 on a $1,000 and to $500 on a $10,000 debt, the entire debt would be repaid in two years, saving thousands of dollars in interest repayments. Once you realise just how much you could be paying in credit card interest, you will be able to keep these figures in mind the next time you go to use your credit card, or take the easy option of just making the minimum payment on your monthly credit card bill.

If you can’t repay the entire balance of your card each month, pay as much as you can, or look at balance transfer credit card options which can help you pay less or even 0% interest while you concentrate on paying down your balance.

Frequently Asked Questions about repaying your credit card

  • Where Do Credit Card Payments Go?
    Payments will go towards the balances that have the highest interest rates first and then to the next highest rate of interest and so forth.
    Cash advances have the highest rate of interest so they will be the first to have payments applied to it. After that, purchases and related fees will be paid down next. Special rates of interest like balances that carry a limited-time balance transfer rate will be paid after purchases and related fees.
    This type of payment system was implemented on 1st July 2012. It is applied to all Australian cards that were opened after that date. Since then, a change came forth to apply this rule to all credit cards regardless of when they were opened which was a bonus and surprise to all credit card customers.
  • What is Credit Card Debt Consolidation?
    If you have a number of credit cards, then you also have a number of repayments you have to make each month, all coming out on different days, for different amounts. To help you better manage your credit card repayments, you may want to consider consolidating your debts into one repayment, you can also usually secure a lower interest rate than you were paying too.
    Credit card debt consolidation allows you to take out a new debt, to pay off your old credit card balances. Your credit cards are paid down to zero and your repayments are consolidated into one monthly bill. You can consolidate your credit card debt by transferring all your balances to a balance transfer credit card offering a low interest rate. Alternatively you can choose to apply for a personal loan to repay your credit card debt, or refinance your mortgage to use equity in your home to consolidate your debts.

Different Approaches to Debt Consolidation

Should I Consolidate My Debt?

The decision to consolidate your debt should not be one you rush into, because while it may seem like the perfect solution to the struggle you are facing right now in trying to pay down your credit card debt, if managed incorrectly you could be making your financial situation worse.

Debt consolidation can help if:

  • You can’t meet your monthly repayments. If you credit cards are maxed out, or close to their limit, paying them off to a consolidation loan can reduce the repayments you are making and make your debt easier to manage.
  • You have a bad credit report. If you have a good credit report, you have the option to take out a personal loan to consolidate your debts, but if you have defaults and late payments in your credit history then you may need to consider other debt consolidation options.
  • You have credit available on a low interest card. If you already hold a low interest credit card with credit available, you can consolidate your cards into the one low interest card with a balance transfer. This will not only save you interest, but will mean one monthly repayment.
  • You have equity in your home. The equity in your home will allow you to borrow against the value of your home, plus the interest rate on your home loan will be much lower than a credit card or personal loan.
  • If you already have low interest credit cards or a personal loan, there may not be any lower consolidation rates you can qualify for. However, even if you can’t get a better deal on your current debts, focussing on your repayments and budgeting to repay them faster will save you in interest.

Balance Transfer Credit Cards

A balance transfer card is essentially another credit card, but you are being offered a lower interest rate on a balance you are transferring from another provider’s card – or cards. A balance transfer card will pay out the balance of your old cards, leaving them with zero balances, and consolidating them into one balance, and one monthly credit card repayment.

Balance transfer cards can offer you a zero interest rate, but this will be valid for only a short time, and if you are consolidating a number of credit card balances, you probably want more time to repay your balance.

Want to compare balance transfer Credit Cards? Click here

Personal Loan

If you can get approval for a personal loan amount to cover the balances of your credit cards, you can use the loan amount to repay your balances to zero, and make one monthly loan repayment. Personal loans can also often offer a much lower interest rate than your standard credit cards had been charging you, and you can choose a personal loan term up to seven years in most cases.

When you apply for a new loan, you may also have to pay establishment fees, as well as show evidence of your earning history and financial situation, to prove you are a good loan candidate. Unlike a home loan where the bank can sell your house if you can’t pay your mortgage, a personal loan is unsecured and you will need to prove you can repay your new loan amount.

If you want to learn more about debt consolidation personal loans click here

Refinancing Your Home Loan

Accessing the equity in your home loan to repay your credit card debt can mean you are paying a much lower interest rate on your debt as a home loan interest rate is usually lower than you will find on a personal loan. Depending on the type of home loan you have, you may need to provide additional documentation to prove you can repay the extra amount, and you may need to have your house revalued to confirm the amount of equity available.

While it may be cheaper to increase the value of your loan in the short term, you are essentially adding the value of your credit card debt to your mortgage. That means you will be repaying your credit card debt for the next (usually) 30 years of your mortgage, when you may be better off looking into one of the shorter term credit card debt consolidation options to rid yourself of the debt in its entirety, sooner.

If you are already struggling to pay your credit card debt, you may need to apply for a Debt Agreement or a Personal Insolvency Agreement. These options will consolidate your debts into one payment which is made to a registered financial authority, after you and they have made an agreement with your creditors that you can’t meet your obligations. A Debt Agreement or PersonalInsolvency Agreement allow you to negotiate a repayment amount you can afford, and terms your creditors are happy with, so your credit card providers get their money, and you can avoid declaring bankruptcy.

Read our ultimate guide to refinancing

Is Debt Consolidation Right For You?

If you can transfer the balances of your credit cards to one low rate card, or pay of your credit card debt with a personal loan or the equity from your home loan, you need to decide which, if any, is the right option for your situation.

Before you choose a method of debt consolidation, make sure you consider:

  • Whether you are eligible, because you don’t want an unnecessary failed application on your credit report when you’re trying to manage our debt.
  • Whether you will be paying a lower interest rate.
  • Whether you will be able to pay off your debts faster.
  • Whether you will be able to avoid late fees because you have just one payment.
  • Whether the interest rate is fixed.

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Consolidate Your Debts Using an Interest Free Balance Transfer Credit Card

A balance transfer credit card can make it easier to manage and repay your credit card debt, by reducing the amount of interest you pay each month, and allowing more of your monthly payments to go towards paying off your debt. You can even often consolidate a number of credit cards or store cards into one balance transfer credit card, with one monthly repayment.

According to RBA figures, approximately $33 billion of Australian credit card debt is accruing interest and with so many Australians struggling to repay their debt, it is no surprise that there are so many balance transfer options available. A balance transfer card may offer you a 0% interest rate, but this will only be for a short introductory period, where you can choose a slightly higher rate for a slightly longer period, or opt for a For Life balance transfer option where you can earn a low interest rate for the life of the balance.

How to Make the Most of an Interest Free Balance Transfer

There is plenty of choice out there when it comes to balance transfer credit cards as 254 of the 288 Australian credit card providers offer a balance transfer deal. Of those offers, 14 are for a 0% interest rate on your transferred balance, but keep in mind a 0% interest rate will only last for a 4-6 month introductory period, after which your balance will revert to earning between 9.55% and 19.99% which are the rates you have been trying to avoid. Therefore, to make the most of an interest free balance transfer, you will need to be able to repay your balance within, or very nearly within, the 0% interest period.

To pay off your balance faster, you need to make higher monthly repayments than the minimum required on your credit card bill. For example, if you are able to make a payment of an extra $600 a month on your 0% interest balance transfer card, you can repay a $5,000 balance in just eight months – two months outside of the introductory period – and pay just $69 in interest. Even if you can only pay an extra $300 from the minimum payments, you pay off your debt in 15 months and pay just $289 in interest. Compare this to paying only $100 extra a month and you will pay $1,097 in interest over 37 months, that’s more than three years showing the difference it makes if you can’t meet the terms of a balance transfer credit card.

Regardless of how much extra you are able to repay on your balance transfer card, your honest intentions can amount to nothing if you make purchases on your new card. While your transferred balance will be eligible for a 0% interest rate within the promotional period, that 0% rate doesn’t usually apply to new purchases on the card. These will be charged the standard rate of interest, and your payments don’t go towards new purchases until your old balance is repaid.

Find and compare 0% Balance Transfers & 0% Purchases Credit Cards

How to Choose a Balance Transfer Credit Card

An interest free balance transfer card isn’t for everyone, and you need to look closely at your history of credit card use and repayments to work out whether it is the right option for you. When comparing balance transfer options, consider:

The size of your balance. Knowing how much you need to pay off will help you create a budget, and to be clear on how much you can afford to repay each month.

How much extra you can afford to repay in a month. Budgeting for extra credit card repayments isn’t fun for anyone, but if you can work out what you can afford, it will point you in the direction of the balance transfer card which suits you; can you pay $600 more than the minimum and pay your balance off sooner, or would you benefit from a For Life balance transfer which gives you more time to pay?

Your credit card and payment history. How likely are you to be able to stick to the payment plan you have created? Work out what you need to do to stay in budget, and whether you can stop using credit for new purchases.

Pay Off Highest Interest Rate Credit Cards First

If you are unable to consolidate multiple credit cards onto a balance transfer card or into a personal loan, then you need to concentrate on repaying the balance of your highest interest rate credit card first. For example, if you have three credit cards, all with the same balance but different interest rates – one with a 10% interest rate, one with a 15% rate and one charging you 25% interest – if you pay the minimum on all your cards, you’ll still be repaying the high 25% interest card for longer. Instead, pay more off of your 25% card each month as this will help you reduce the balance on this card sooner, and once your highest rate credit card is paid off, you can concentrate on your smaller, easier to manage, credit card balances with a lower interest rate.

Pay Off Your Balance Within the Introductory Period

Balance transfer card providers offer attractive low interest rate deals, to encourage you to switch the balance of an existing credit card. Balance transfer credit cards will tempt you with interest rates as low as 0%, which means that an outstanding balance you have on and existing credit card can be transferred, and cease charging you any interest at all.

Just remember that a balance transfer offer this low will only usually run for three to six months. After this time, the standard interest rate, also known as the revert rate, will be charged on your balance. Of course, any new purchases you make on your balance transfer card will have incurred the standard interest rate right away. This is why it is important to compare the standard rate on a balance transfer card too, because it is possible to avoid paying up to 20% interest on your credit card.

So while a balance transfer card is a great way to help you get control of your debt and avoid paying interest on your credit card balance, remember to pay off your balance within the introductory low rate period.

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How To Negotiate a Better Deal With the Bank

Finding a better interest rate on your credit card doesn’t mean you have to apply for a new card, or make a balance transfer to a low or 0% interest rate credit card. It is possible to negotiate a better interest rate on your current credit card to allow you to pay less in interest each month, and pay off your balance sooner. Start by following these tips and advice to help you negotiate a better credit card deal.

What Can Your Bank Do?

It will help to contact your local bank if you need help. Your local bank may be able to get interest payments to stop for a period of time. This can be used to simply work to get you to have an easier time with getting a payment handled.

You will need to provide plenty of evidence that suggests how you are behind on your debts. This is so your banker is going to be more likely to stop your payments.

If none of these options secure you the deal you want, try explaining that you are experiencing financial hardship, and this is the reason you need a lower interest rate on your card. Banks are obligated to find you a more manageable payment schedule before closing your account and sending in the debt collectors – plus that costs them money too and they want to avoid it – so ‘financial hardship’ may just be the phrase your credit card provider needed to hear to offer you a better deal.

Negotiation tips:

  1. Ask and you may receive
    The first step to negotiating a better deal on your credit card is to pick up the phone. Make contact with your credit card provider and find out who you need to speak to – that is, who is authorised – to secure a better deal. Remember, the person who answers your initial enquiry may just be the person who can help you, so be polite from the start.Your bank or credit card provider is still a business, and like any other business, their customers are important to them. As a result, you are just as entitled to ask for a better deal from your credit card dealer, as you are to negotiate a better deal with a car dealer or real estate agent.
  2. Remain calm and polite
    Just because you are entitled to ask for a better deal it doesn’t mean you have to act like it. Always remain calm and polite when you’re speaking to anyone from your bank and they will be much more willing to help you. while your credit card provider is interested in keeping your business, their company won’t fail if you leave, and they are not going to make a loss on your business just to keep you, so you’ll also need to be realistic in what you’re asking for.
  3. Know what you want, and what you’re likely to get
    In negotiating for a better credit card interest rate you may also be able to have the annual fee waived, or better transaction fee deals. However, it is important that you ask for a realistic deal and if you are currently paying 19% interest, don’t expect your provider to offer you a 0% interest rate.
  4. Make comparisons
    Your credit card provider may be able to offer you a better deal straight away, or it may take some haggling to get the deal you want, but remind your provider of better offers you have seen from their competitors, and make it clear you are serious about taking up these better deals. When you point out the lower interest rates or the $0 annual fees of other credit cards you may receive a better deal, but try and hold out for something even better – ask about the payout figure on your credit card because you are considering leaving, and your provider will know you are serious.
  5. Be persistent
    The first offer you get will not be the most competitive deal your provider can do so ask and ask again and negotiate until the interest rate is lowered or the annual fees are dropped. If you don’t get the response you are looking for, hang up and call again as a different operator may offer you a different deal. Alternatively visit a branch and speak to a manager face to face about products which may better suit you.

What Can You Get?

There are a variety of different kinds of options that you can use for getting credit card debt help. For example:

  • You can consolidate your debts with a credit card debt loan. This can help you to move your payments into one easy to handle payment while potentially dealing with a reduced interest rate. You could ask a firm like Fox Symes for assistance with your consolidation needs.
  • Check with your family members. You should talk with your family about borrowing money or working on all of the debt together. This may help you to have an easier time with handling your debts without too much stress involved in the process.
  • Check on the terms of your credit cards. You should see if there are any interest-free periods on them. You could use these times to pay off your debts.
  • You can set up your own special plan for reducing your debt. This can be done with a twelve-month plan that involves changing your spending habits. You will need to ask a budget specialist to help you out with getting this part of your credit card debt plan handled.

What If These Options Don’t Work?

You will need to use all of these options for help. Failing to get any of these options to work can be very harmful to your life. It can cause your debt to become larger in size. It can make it to the point where you may not be able to get a loan or any more credit later on.

Also, you might not be able to afford anything outside of your minimum payments. This may cause your debts to become higher than it should be.

These are good points for credit card debt help that you must use. These will help you to ensure that you are going to keep your debts from being unmanageable. You will need to contact other people and get proper plans set up if you want to keep your debt under control. This is so you can afford to handle everything that you owe.

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Simple Ways To Cut Your Credit Card Bill

Many people wonder how to cut their credit card bill as they sift through their monthly stack. It can be difficult to figure out how you got to the place where you are looking at a bill that is more then you make in six months or even a year.

The fact is that like most people you probably overspent. It is easy to do with the credit card system of buy now pay later. The problem lies in the pay later part. With skyrocketing interest rates you might have no idea how to cut your bill but with some diligence it can be done.

If your intention is to reduce credit card debt, here are a few steps you can take to help you achieve your goal as quickly as possible. This assumes that you are not able to consolidate your debts with a balance transfer to a card with a lower rate of interest.

How to cut my credit card bill:

  1. Make your payments on time. If you are one of the people, and there are a lot of us, who miss payments regularly or even occasionally it is costing you big dollars. Not only does your credit card company charge you a fee for the missed payment they might also raise your interest rate and put a mark in your credit file. The way to avoid late payments is to set up a direct debit from your checking account for your monthly credit card bills
  2. Look into zero percent balance transfers. This is a simple way to cut back your credit card bill. If you can qualify for a card that offers zero percent balance transfers then you can take your debt off of an interest bearing card to it and use your money to actually pay the debt rather then the interest. Just read all of the fine print because these rates are almost always introductory so you will want to work hard to pay off the debt before the interest rate reverts back to normal.
  3. Pay more then the minimum monthly payment. Pay as much as you can each month. Don't just pay your minimum payment. A $2,000 debt at 20% with a 2% minimum payment will take over forty years to pay back, and cost over $5,000 in interest if all you ever pay off is the minimum amount. Add $50 each month and the debt is gone in three years with just $500 interest to pay. As you reduce credit card debt, so too does the minimum amount become less, but do not drop your payments in response. One of the worst traps of credit card use is only making minimum payments. By doing this it is nearly impossible to make real headway on your debt because once you pay interest and fees each month there is little if any money actually going to the principal debt. Pay as much as you can afford each month and you will start to see a decrease in your balance.
  4. Assess the damage. Round up all your debt on one sheet of paper, with those debts at the highest rates of interest above. These are the ones you need to attack first. Make a note of the minimum interest payments required.
  5. Stop causing damage. Don't use your credit cards any more. You can reduce credit card debt by not adding to it. Pay with cash or a debit card only. This will stop more water pouring into your boat as you are bailing it out. It's your choice whether you cut your cards up or lock them away, just make sure that this particular love-hate relationship stays on the hateful side.
  6. Use extra cash to pay down the balance. If you are feeling flush one month, use the extra to reduce the debt even more. Do not be tempted to reward yourself with a gift that will only add to your debt.
  7. Roll over minimum payments. If you have several credit card debts, when one is finished, continue to set aside an amount as though that debt is continuing, only pay it towards one of your other debts as an extra payment. This is a great way to reduce credit card debt as fast as possible.
  8. Use some savings. This decision should not be taken lightly, and you should never reduce your emergency funding to such an extent that you could not survive for several months if, say, you lost your job. However, if you have an excess in your savings account that you could spare, it will be better off paying down a credit card debt at 15% than earning you interest at 2%.
  9. Keep your goals in mind. Keep a chart visible to maintain focus, and to help you keep track of how you are progressing.

Stop asking yourself how to cut my credit card bill and start working on the options listed above. The most beneficial option is getting out of credit card debt for good.

The right thing you can do for yourself and your financial security is to get out of credit card debt for good.

Switching to a Debit Card

The ultimate way to take control of your debt and stop spending more than you earn is to stop using your credit card. It sounds simple enough, but spending only the money which has come in as wages in a week can be a hard habit to get back into, especially if you are used to always having those extra funds on a credit card.

Reacquaint Yourself With Cash

A good way to get back into the habit of only spending what you have earned is to go to the ATM on payday, withdraw a certain amount of cash you think you’ll need for the week and put it in your wallet. Pay your bills and put fuel in the car and when your wallet is empty, it’s empty. In this way it is impossible to spend more than you have earned, the only way you can do that is if you use your credit card – so don’t.

You don’t accidently use your credit card and you certainly didn’t accidentally apply for your card – you filled out a form, you waited for approval, you signed the card and chose a PIN you’d remember. The point is, getting into debt is a conscious decision you are making, and it’s time to change your behaviour. When you attempt to gain control of your personal finance, 80% of the process is about your behaviour; you can choose the right products, get all the right advice, make a balance transfer, but if you’re not willing to make changes to your behaviour then you’re just going to get into the same debt and the same situation all over again.

A Debit Card is Truly Fantastic Plastic

If you need the convenience of a credit card for phone and internet banking, or if you’re just not comfortable carrying around all your cash at once, then switch to a debit card. A debit card looks and behaves just like a credit card, and debit cards are even issued by both Visa and MasterCard. However, a debit card accesses funds in your own linked cheque or savings account, so you are spending your own money, not accruing a balance which has to be repaid. A debit card will allow you to take the same control of your spending because once your bank account is empty, you cannot use your debit card because there are no funds available.

When you link your debit card to your own finances, choose an everyday transaction account, not the account where you keep your emergency fund or deposit your savings. Keeping your saving and your spending money separate will also help you build financial security.

Some debit cards can also act as a credit card too, but if you really want to change your debt behaviours, don’t be tempted to add an overdraft to your debit card. Instead, get into the habit of spending only the cash you have left over after paying your bills and buying your groceries.

Any or all of these simple steps can help to reduce credit card debt. Just remember that the time to start is now.

If you need more information about the types of debt consolidation you are eligible for, and whether they are helpful to your situation, meet with your accountant or financial adviser to find out more.

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Identify The Reason For Your Credit Card Debt Problem

In most cases, people get into debt over a period of time due to a series of financial errors. The first step in any recovery program is admitting that you have a problem. Recovering from financial issues is no different, first you have to admit that you have a problem. Not only do you have to realise that you have a financial issue to deal with, but also how you got into that problem in the first place. If you want to get your finances back on track, you first have to figure out how it went off the rails in the first place. Most of us fall into a few categories that lead to money problems. By figuring out which category you fit into, you can then figure out to get out of it.

What Type Of Credit Card Problem Do You Have?

  • You overspend. This is a problem for a whole lot of people. When you have that plastic back up, it is easy to convince yourself that you can afford to make purchases that are outside of your true budget. Remember that the spending limit that is set by your card issuer is not necessarily what you can afford to spend.
  • You have lots of cards. A good rule of thumb is that you only need one high quality credit card and one back up. If you have multiple cards, you are more likely to have more credit available then you can honestly afford to maintain. This can lead to increased spending and moving debt around instead of actually clearing out your balances on a regular basis. Examine the ones that you have and pick out one or two that really work for your budget. Set the others aside and get their balances paid off and then get rid of them all together.
  • You only make the minimum monthly repayments. This is probably the biggest debt trap that people fall into when they have plastic. Do not assume that your card balance is the same as the balance on a loan. With a loan, your monthly payments are enough to eventually pay off the full balance, but this is not true for plastic. Usually the minimum payment only pays a tiny amount toward the principle with the rest going to interest and fees. At that rate, it can be impossible to ever actually get your balance down to zero.

Credit cards are absolutely necessary in this day and age. However, the financial issues that are associated with them are absolutely not necessary. It might seem impossible, but you can get through any debt crisis as long as you are willing to admit your mistakes and to deal with them in a responsible manner. Once you learn the right skills, managing your money will be easy and you will never have the stress of carrying card balances again.

Personal finance guide that can help you pay off your credit card faster

Keep away from credit card debt

People say that it is better to prevent a problem than to cure or solve it. If you want to keep away from credit card debt, you need to make sure that you have chosen the appropriate credit card that meets your financial requirements.

Needing a credit card at some point in our lives can't be avoided because you'll never know when you'd need it, and owning a credit card is almost becoming a compulsory thing in order to get by with credit cards used for online purchases, security deposits, and identity checks. You need to be very careful in choosing the right type of credit card because the wrong decision could negatively effect your financial situation, particularly with unnecessary interest repayment expenses which will slow down the rate at which you can repay your debt.

If you are struggling with your credit card, our guide to management of your credit card debt may come in handy. This could help you avoid spiralling into debt.


Be sure to compare the features of each credit card before you make a decision. You need to check the most important aspects of a credit card such as the fees, interests, charges - our comparison tables include this information, but it is also important to read the terms and conditions for each card offer.

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4 Responses to Reduce Credit Card Debt

  1. Default Gravatar
    Marguritta | November 14, 2014

    I received $500 from my tax return. I do have regular payments into my credit account. I do pay more than my set amount. Or shall I keep it to spend at Christmas instead of putting things on my card/

    • Staff
      Elizabeth | November 17, 2014

      Hi Marguritta,

      Thanks for your question.

      There is no real easy answer as to the best way to pay down your credit card debt. It depends on how much interest you’re currently paying, if you have any other open credit accounts or debts, and as you mentioned, you may be looking at increased expenditure over Christmas.

      You may want to sit down and crunch some numbers as to how much using the $500 will save you in interest repayments, and if it might be better than continuing to make your regular repayments. You can also take a look at this useful guide on reducing your credit card debt.

      I hope this has helped.



  2. Default Gravatar
    Sonny | May 1, 2013

    Hi there, my name is Sonny. I am 457 work visa holder for next four years. my yearly income is $55000 approximately.
    I want to take loan for about $50000, which I want to pay off in five years. I want know which bank would be better for loan and which has low interest rate?
    Thank you.

    • Staff
      Jacob | May 1, 2013

      Hi Sonny. Thanks for your question. If you’re interested in a loan, please refer to our personal loan comparison site, you can compare options for a loan here. Jacob.

Credit Cards Comparison

Rates last updated February 20th, 2017
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
Earn 2 Velocity Points per $1 spent and save with a reduced annual fee and a 0% p.a. balance transfer offer for 18 months.
20.74% p.a. 0% p.a. for 18 months $64 p.a. annual fee for the first year ($129 p.a. thereafter) Go to site More info
HSBC Platinum Qantas Credit Card
Receive 60,000 bonus Qantas Points on eligible spend within 3 months. Enjoy access to premium benefits and complimentary insurance.
19.99% p.a. $199 p.a. Go to site More info
NAB Low Rate Credit Card
The NAB Low Rate Card offers 0% p.a. on balance transfers for 18 months. This card also comes with a low annual fee.
13.99% p.a. 0% p.a. for 18 months with a one off 3% balance transfer fee $59 p.a. Go to site More info

* The credit card offers compared on this page are chosen from a range of credit cards has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing cards.

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