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How to pay off your credit cards

6 strategies to help you pay off credit card debt faster.

Paying off credit card debt can be tough but it's a lot easier when you know your options. A simple first step is to look at how much you owe and what you can afford to regularly repay. Then, you can start paying off the card or cards at a pace that works for you. Here are 6 proven strategies you can use to do just that.

How to pay off credit cards faster

  1. Make regular repayments
  2. Pay more than the minimum
  3. Focus on paying off 1 card at a time
  4. Consolidate debt
  5. Consider using savings
  6. Access financial support services

Need help now? Call the National Debt Helpline on 1800 007 007 to speak to a financial counsellor for free.

1. Make regular repayments

Paying on time means you'll avoid late fees (if your credit card charges them). This means you need to make at least 1 payment by the due date on your credit card statement.

If you get paid weekly or fortnightly, you could also time repayments around payday so they fit in with your routines. This makes it easier to stick to a repayment schedule.

The key is to have a realistic repayment plan. So, create a budget for your regular expenses, then calculate exactly how much money you can afford to set aside for repayments each week, fortnight or month.

Tip: Setting up an automatic debit to transfer that amount to your credit card account on a recurring date each month helps ensure that you stay on track.

2. Pay more than the minimum

Making only the minimum repayments on your account will keep you trapped in debt for longer and you'll pay more interest than you need to.

For example, a $2,000 debt at 20% interest and a 2% minimum payment would take around 9.03 years to repay and cost $2,336 in interest if you only paid the minimum amount. Repay an extra $50 each month and the debt could be paid off in 2.33 years, with $519 in interest charges.

The important thing to keep in mind is that whatever you can afford to pay above the minimum helps you save on interest charges and repay the debt faster. Whether that's an extra $5, $50 or $100 – it all helps.

Tip: You can use a credit card repayment calculator to help see how long it will take to pay off your credit cards – and how much time and money you can save with different repayment amounts.

3. Focus on paying off 1 card at a time

If you're paying off a few credit cards, you'll need to pay at least the minimum amount required for each account.

Beyond that, you can pick the one with the highest interest rate or the one with the smallest balance and pay more off of that card until the balance is $0. Close that account and then focus on the next one.

  • Paying off the card with the highest interest rate first. This strategy focuses on reducing interest charges so you'll end up paying the least amount of interest over the long term.
  • Paying off the card with the smallest balance first. This strategy focuses on reducing the number of repayments you need to make in the shortest time. Seeing 1 balance at $0 can be motivation to keep paying off the rest.
Tip: If you want more structure for your repayments, see if any of your credit cards offer instalment plans. These plans let you pay off what you owe in equal amounts over a fixed period and sometimes offer lower interest rates than the card's standard rates, giving you another way to pay off individual cards.

4. Consolidate debt

Another way to deal with a few different debts is to combine them into a single account. This is known as debt consolidation and helps reduce the number of fees and interest charges.

There are 3 main ways to consolidate debt:

  • Balance transfer credit cards

These cards let you transfer 1 or more credit card balances onto a new card, usually offering a low or 0% interest rate for an introductory period. This rate can last up to 3 years but after that, a higher ongoing rate applies if you haven't paid off the whole balance.

  • Debt consolidation personal loans

Personal loans typically offer lower ongoing interest rates than credit cards. You can get one to pay off your existing balances, then repay the total with regular, structured repayments.

  • Mortgage refinancing

This is an extreme option. Because home loan interest rates are much lower, it can work for some people, especially for large credit card debts that attract a lot of interest. As an example, the average variable home loan rate on Finder's database in February 2024 was 7.24% while the average standard credit card interest rate was 20.07% p.a.

But moving credit card debt to a home loan is risky because it is a long-term debt that is secured by your property. Before deciding to refinance as a way to pay off credit card debt, check what the repayments will be and aim to pay a higher amount if you can to help keep costs to a minimum.

5. Consider using savings

If you have savings, think about whether you can use some to help pay off your credit card debt faster.

Putting a lump sum towards your credit card balance (or balances) reduces the amount of interest charged so that more of your future repayments go towards the balance.

While it's important to have some savings set aside for goals and emergencies, remember that the interest you earn on your savings account is much lower than the ongoing interest rates charged on credit cards. Putting a bit more towards the debt now can help you with your other money goals in the future.

6. Access financial support services

If you're experiencing financial difficulties, contact your credit card provider as soon as possible to let them know. It can help you work out an affordable plan.

You can also speak to a financial counsellor for free by calling the National Debt Helpline on 1800 007 007 or through the online chat service. The website also has free resources.

Tip: If you want legal help, there are also community legal services around Australia. The Australian Financial Security Authority (AFSA) has a list of services for different states and territories.

Do you have credit card debt?

Australians have $18.1 billion of credit card debt accruing interest according to Reserve Bank of Australia data for September. Individually, the average Australian has $1,157 of credit card debt, according to October data from our consumer sentiment tracker. It peaked in January ($1,967) and has slowly been declining throughout the year.

Finder survey: How much do Australians of different ages usually pay off their credit card when they get a statement?

ResponseGen ZGen YGen XBaby Boomers
All of the balance7.87%8.42%6.91%5.68%
The majority (more than 50%) of the balance5.62%4.89%2.3%
About half of the balance2.25%2.72%0.99%
Less than half of the balance0.54%1.64%0.28%
I only pay off my minimum repayment0.27%0.66%0.28%
Source: Finder survey by Pure Profile of 1113 Australians, December 2023

Frequently asked questions

Can I pay off a credit card in full?

Yes, and if you can then you should. Paying off your credit card in full is good because it means you'll save on interest charges and could even help you get interest-free days on future spending. It can also help improve your credit score.

How can I make a credit card payment?

Your credit card statement lists the different ways you can make repayments. These usually include the following:

  • BPAY
  • Internet banking (if both accounts are held with the same bank)
  • At a branch
  • Australia Post
  • Automatic payments for the minimum amount, the total balance or a nominated dollar amount above the minimum required amount

What if I need to make changes to my autopay?

Make sure you let your bank know as soon as possible if you need to make changes to your autopay. Generally, you need to give at least 7 days' notice to your bank if you want the changes made.

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