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How to deal with credit card debt

Information verified correct on January 19th, 2017

Beat your credit card debt with a strong strategy for achieving financial freedom.

If you find yourself filled with dread at compounding interest fees and struggle to make monthly repayments on your credit card, you are not alone. As of 2016, there were more than 16 million credit cards in circulation in Australia. This translates into a whopping national debt of approximately $32.5 billion. On average, an Australian credit card holder makes a monthly repayment of $1,716 and carries an interest-accruing balance of $1,950 (see here for more stats). At that rate, it’s little surprise that one in three Australians also default on their credit card payments.

Since defaulting on your credit card payments is best avoided (particularly if you want to remain eligible for any form of credit over the next five to seven years), it’s important to take positive steps to regain control over, and ultimately eliminate, your debt.

Use this guide to discover how you can manage your credit card debt and achieve financial freedom.

How to manage your credit card debt

Develop a strong strategy by implementing a combination of these tips. Your plan will be more likely to succeed if you act on at least three of the suggestions below.

  • Talk to a credit advisor. Seeking professional advice is often the first step towards financial freedom. A credit advisor or debt counsellor can offer practical financial tips on budgeting and creating a feasible repayment plan. If you’re hesitant about spending money you don’t have on such a service, free help for debt management is also available. See our free budget planner for more tips on organising your finances when managing debts.
  • Create a repayment plan. A repayment plan is essential when it comes to chipping away at your debt. Many borrowers fall into the mentality of thinking they just need to make the minimum monthly repayments on their credit card. The wiser move is to pay off as much debt as soon as possible. This will help minimise interest charges over the long term. Establish a budget, designate your monthly repayment amounts beforehand, then stick to the plan!
  • Get a 0% balance transfer credit card. Consider applying for a new balance transfer credit card. These balance transfer promotions can often offer you 0% interest on your debt for up to 24 months. This can result in substantial interest savings on your debt if you’re able to repay the full amount before the interest-free promotional period ends. With these promotions, it’s important to also factor in a possible balance transfer fee (up to 3% of your transferred balance) and the reverting interest rate that will kick in once your promotional period ends. All things considered, however, a 0% balance transfer credit card could be just the tool you need to take control of your debt.
  • Reduce your expenses. Reducing your expenditure will mean creating less credit card debt moving forward and availing more immediate funds for paying off existing debt. It will also help you develop smart spending habits to avoid falling into debt again.

Compare 0% Balance Transfer Credit Cards

Rates last updated January 19th, 2017.

Citi Simplicity Card

0% p.a. for 9 months has been updated to 15 mos. on balance transfers. Offer ends 30 June 2017.

January 13th, 2017

Virgin Australia Velocity Flyer Card - Balance Transfer Offer

0% p.a. for 18 months balance transfer offer has been extended until 28 February 2017.

January 16th, 2017

Virgin No Annual Fee Credit Card

Balance transfer and $100 cashback offers have been extended until 28 February 2017.

January 16th, 2017

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Balance transfer rate (p.a.) Purchase rate (p.a.) Annual fee Interest Saved
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
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
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
Enjoy a 0% p.a. balance transfer offer for 18 months and also earn 2 bonus Velocity Points in the first 3 months on everyday spend.
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
NAB Premium Card - Balance Transfer Offer
Enjoy a balance transfer offer of 0% p.a. for 24 months with a 3% transfer fee.
0% p.a. for 24 months with 3% balance transfer fee 19.74% p.a. $90 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
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
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
NAB Low Rate Platinum Card
Offers a low introductory rate of 0% p.a. on both balance transfers and purchases for 15 months plus enjoy premium benefits including international travel insurance.
0% p.a. for 15 months with 3% balance transfer fee 0% p.a. for 15 months (reverts to 13.99% p.a.) $100 p.a. Go to site More info
Virgin No Annual Fee Credit Card
No annual fee for the life of the card with $100 cashback and a 0% p.a. offer on balance transfers for 18 months. Spend criteria applies for cashback offer.
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
Citi Rewards Credit Card - Platinum Card
A long term balance transfer offer with platinum rewards and benefits.
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
St.George Vertigo Visa
Introductory offer of 0% p.a. for 18 months on balance transfers and 0% p.a. for 6 months on purchases, plus a low annual fee.
0% p.a. for 18 months 0% p.a. for 6 months (reverts to 13.24% p.a.) $55 p.a. Go to site More info
Bank of Melbourne Vertigo Visa Credit Card
Enjoy a low annual fee combined with 0% p.a. balance transfer offer for 18 months and 0% p.a. for up to 6 months on purchases.
0% p.a. for 18 months 0% p.a. for 6 months (reverts to 13.24% p.a.) $55 p.a. Go to site More info
ANZ First Visa Credit Card
Enjoy 0% p.a. balance transfer rate for the first 16 months, a low annual fee, interest-free days on purchases and a low minimum credit limit.
0% p.a. for 16 months with 2% balance transfer fee 19.74% p.a. $30 p.a. Go to site More info

Read more about 0% balance transfer credit cards

Working yourself out of debt might be a long-term challenge, but remember that your debt didn’t appear overnight either. With a strong desire for financial freedom, some discipline and commitment to your repayment plan, you can reduce, or eliminate your debt. Plus, you’ll also learn how to better manage your money through the experience.

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Sally McMullen

Sally McMullen is a journalist at finder.com.au who is a credit cards, frequent flyer and travel money expert by day and music maven by night.

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