How can I get rid of my credit card debt?

Information verified correct on December 5th, 2016

Practical and simple steps you can take to finally pay off your credit card balance for good.

If you’re struggling to deal with credit card debt, take heart. You are not alone and you are not without help. Many people experience credit card debt and find a way through it. With sufficient motivation, time and discipline, you too can enjoy financial freedom again. This guide will take you through the simple steps and tips that you can use to get rid of your credit card debt.

How to get rid of your credit card debt

It’s hard to know where to start when you have a lot of debt to deal with. These steps are designed to form a path to financial freedom, and even following them one at a time will help you along the way.

  1. Avoid making new purchases. To get rid of your debt, you must first stop adding to it. Stop spending and start using that money to pay down your existing balance. Remember that your ultimate goal is to be debt free. You can treat yourself again once you’ve achieved that.
  2. Calculate the total amount of money you owe. It’s time to face the hard truth. This process might be painful, but it is necessary and short-lived. Get all your account balances together and make a list. Include your debt amounts, the interest you’re paying on each of those amounts and any other charges. Sum them up and take a good, long, hard look before you say your goodbyes.
  3. Create a budget. Now that you have your total debt amount calculated from step 2, create your budget. Start with your monthly income and figure out your essential monthly expenses. It’s time for tightening measures, so expenses should include only the bare necessities such as bills, groceries, petrol and other living expenses you feel you need. After establishing your income and expenses, it’s time to create a monthly schedule for repaying your debts. Work out how much you can pay off each month, but be practical and leave a margin for error or emergencies. This budget planner could be helpful.
  4. Set up automated payments. Using your budgeted monthly repayment amount from step 3, set up automated credit card payments to make sure you actually do what you plan to. Set up the payments to come out of your bank account the day after you receive your wages. This is a sure-fire way to stay committed to your budget.
  5. Contact your credit card provider. This isn’t a compulsory step, but if you’re feeling truly overwhelmed by your debt, it might be worthwhile appealing to your credit card provider for a renegotiation of terms. Creditors are sometimes willing to allow a temporary postponement of payments or a slightly more favourable interest rate. Generally they would rather give you a discount than risk you defaulting on your debt.
  6. Consider a balance transfer. Balance transfers can buy you time to repay your debt without incurring any more interest. This is because balance transfer credit cards offer low or 0% interest on your transferred debt for a promotional period of time, sometimes for as long as 24 months. This might be exactly what you need to get rid of that debt more quickly, not to mention what you will save on interest fees that add hundreds of dollars to your debt every year.
What if I have multiple credit card debts?
  • Consolidate your debts onto one card. This follows on from step 6, where you can consider a balance transfer to help with your debt consolidation. As well as giving you the opportunity to save money on otherwise expensive interest fees for a promotional period of time, this will mean you only have to pay off one account. It could also help you save on additional charges, such as credit card annual fees.
  • Pay off the card with the highest interest rate first. This stems from one school of thought, which assumes that you will save the most money by paying off the account with the highest interest rate first, followed by the account with the next highest interest rate and so on. Naturally, you would still have to make minimum repayments on your other cards during this time.
  • Pay off the card with the lowest balance first. For some people, paying off the card with the lowest balance first is more motivating. This strategy will reduce the number of outstanding accounts sooner and cuts down on interest charges in the process. Of course, you would still also need to make minimum repayments on your other cards at the same time.

credit-card-advise

Other tips to help get rid of credit card debt

In addition to the steps above, following these tips can also prove very helpful:

  • Switch to a card with a lower annual fee. This helps with reducing overall expenses, but can be doubly effective when combined with a balance transfer offer. If you want to minimise your outgoing card fees, you should consider a 0% balance transfer credit card with no annual fee.
  • Cancel cards you don’t use. This tip will help save on annual fees and other charges that you may be paying on your cards. Also, this will help reduce the temptation to spend more money.
  • Use your savings. Since your savings account could never offer an interest rate as high as the one you’re probably paying on your credit card, it follows that you should be using your savings to pay off your credit card debts. Use the cash under your bed, that rainy-day fund and every penny you can find to pay off those debts, because they’ll just swell up with interest if you don’t. And once they’re paid off, you’ll have more money you can put towards your savings.
  • Make weekly payments. Even though your statement comes monthly, credit card interest is actually calculated on a daily basis. This means that increasing the frequency of your payments can help to reduce the total interest you pay over time.
  • Request a hardship variation. If you’ve recently experienced financial difficulty due to verifiable circumstances such as poor health or unemployment and you’re struggling to make repayments, you can apply to your issuer for financial hardship variation by phone or in writing. Your credit card provider is obliged by law to consider and respond to this request. If successful, you will be granted temporary relief from your debt repayment. This could include payment postponement, an extended payment time frame or a temporary interest freeze. This can provide some relief in the short-term but is only a temporary measure.
  • Seek professional help. Gaining control over your debts can be very difficult, especially at the beginning. It can be helpful to get professional advice and there are even a range of free services for debt management that you can consider.

Credit card debt can often seem overwhelming, but by following these steps and tips to help you get rid of credit card debt you can make lasting and sustainable changes in your financial life.

9 to 24 month Balance Transfer Credit Cards Offers

Rates last updated December 5th, 2016.

Virgin No Annual Fee Credit Card

Balance transfer and $100 cashback offers have been extended to 16 January 2017.

November 1st, 2016

Virgin Australia Velocity Flyer Card - Balance Transfer Offer

Balance transfer offers has been extended until 16 January 2017.

November 1st, 2016

Citi Simplicity Card

5% cash back + 0% p.a. for 9 months on balance transfers. Offer ends 30 June 2017.

November 18th, 2016

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Balance transfer rate (p.a.) Purchase rate (p.a.) Annual fee Interest Saved
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 bonus Velocity Points in the first 3 months, offer ends 16 January 2017.
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
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
NAB Low Rate Credit Card
The NAB Low Rate Card offers 0% p.a. on purchases and balance transfers for 15 months. This card also comes with a low annual fee.
0% p.a. for 15 months with a one off 3% balance transfer fee 0% p.a. for 15 months (reverts to 13.99% p.a.) $59 p.a. 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
St.George Vertigo Visa
Introductory offer of 0% p.a. for 18 months on balance transfers and 1% p.a. for 12 months on purchases, plus a low annual fee.
0% p.a. for 18 months 1% p.a. for 12 months (reverts to 13.24% p.a.) $55 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
NAB Low Fee Card
Enjoy a low introductory rate of 0% p.a. on balance transfers and purchases for 15 months.
0% p.a. for 15 months with a one off 3% balance transfer fee 0% p.a. for 15 months (reverts to 19.74% p.a.) $30 p.a. Go to site More info
St.George Vertigo Platinum
A platinum card with a balance transfer offer of 0% p.a. for 18 months and an introductory purchase offer of 1% p.a. for 12 months with an annual fee waiver for the first year.
0% p.a. for 18 months 1% p.a. for 12 months (reverts to 12.74% p.a.) $99 p.a. Go to site More info
Westpac Low Rate Card
A no frills credit card with an introductory rate of 0% p.a. for 16 months on balance transfers and 1% p.a. for 12 months on purchases.
0% p.a. for 16 months 1% p.a. for 12 months (reverts to 13.49% p.a.) $59 p.a. Go to site More info
Bank of Melbourne Vertigo Visa Credit Card
A low rate card from Bank of Melbourne with a long term balance transfer offer 0% for 18 months and a short term introductory rate on purchases.
0% p.a. for 18 months 1% p.a. for 12 months (reverts to 13.24% p.a.) $55 p.a. Go to site More info
Australian Military Bank Low Rate Visa Credit Card
Enjoy a low interest rate of 10.99% p.a. on purchases, combined with a balance transfer offer of 0% p.a. for 12 months and a low annual fee.
0% p.a. for 12 months 10.99% p.a. $49 p.a. 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. $199 p.a. annual fee for the first year ($249 p.a. thereafter) Go to site More info
Bank of Melbourne Vertigo Platinum
A platinum card with a low balance transfer offer of 0% p.a. interest for 18 months and 1% p.a. for 12 months on purchases combined with complimentary insurance covers.
0% p.a. for 18 months 1% p.a. for 12 months (reverts to 12.74% p.a.) $99 p.a. 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
BankSA Vertigo Visa
A low interest rate card with a low annual fee, a long term balance transfer offer of 0% p.a. for 18 months and an introductory offer of 1% p.a. for 12 months on purchases.
0% p.a. for 18 months 1% p.a. for 12 months (reverts to 13.24% p.a.) $55 p.a. Go to site More info
BankSA Vertigo Platinum
Enjoy 0% balance transfer rate for 18 months and 1% purchase rate for 12 months if you apply and are approved by 4 January 2017.
0% p.a. for 18 months 1% p.a. for 12 months (reverts to 12.74% p.a.) $99 p.a. Go to site More info
Citi Simplicity Card
Take advantage of the 0% p.a. for 9 months offer on balance transfers, a low interest rate on purchases, an annual fee waiver for life, plus 5% cashback on retail purchases.
0% p.a. for 9 months 19.99% p.a. $0 p.a. Go to site More info
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