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How to deal with credit card debt

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 May 28th, 2017.

Citi Rewards Platinum Credit Card

Balance transfer offer has been extended until 30 June 2017.

May 12th, 2017

American Express Explorer® Credit Card

Bonus points offer has been changed from 100,000 to 50,000 points.

May 16th, 2017

American Express Velocity Platinum Card

Bonus points offer has changed from 50,000 to 100,000 which is valid until 31 July 2017.

May 16th, 2017

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Balance transfer rate (p.a.) Purchase rate (p.a.) Annual fee Interest Saved
NAB Premium Card
Enjoy Platinum benefits including complimentary travel insurance, a 24/7 concierge and Visa Front Line Access.
0% p.a. for 24 months with 3% balance transfer fee 19.74% p.a. $90 p.a. Go to site More info
St.George Vertigo Visa
Save with a low ongoing purchase rate and up to 55 interest-free days.
0% p.a. for 14 months 13.24% p.a. $0 p.a. annual fee for the first year ($55 p.a. thereafter) Go to site More info
Citi Rewards Platinum Credit Card
Earn Citi Reward Points on everyday spend and receive complimentary travel insurance.
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 Platinum
A low rate Platinum card with up to 55 interest-free days on purchases and access to Visa's Platinum Concierge service.
0% p.a. for 20 months 12.74% p.a. $99 p.a. Go to site More info
ANZ Platinum Credit Card - Exclusive Offer
An exclusive credit card offer through finder.com.au that includes complimentary insurance covers.
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
HSBC Platinum Credit Card
Offers an annual fee refund with a yearly minimum spend of $6,000.
0% p.a. for 22 months with 2% balance transfer fee 19.99% p.a. $99 p.a. Go to site More info
Virgin Australia Velocity Flyer Card - Exclusive Offer
Earn 2 Velocity Points on top of the standard earn rate per $1 spent within the first 3 months, plus a $129 Virgin Australia Gift Voucher each year.
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 Low Fee Card
Receive up to 44 interest-free days on purchases and complimentary Purchase Protection Insurance.
0% p.a. for 18 months with 3% balance transfer fee 19.74% p.a. $30 p.a. Go to site More info
HSBC Low Rate Credit Card
Enjoy the benefits of the home&Away Privilege Program and the ability to pay using Apple Pay.
0% p.a. for 15 months with 2% balance transfer fee 13.25% p.a. $55 p.a. Go to site More info
Westpac Low Rate Card - Online Only Balance Transfer Offer
Offers a low introductory rate on purchases and up to 55 interest-free days.
0% p.a. for 24 months with 2% balance transfer fee 13.49% p.a. $59 p.a. Go to site More info
Citi Simplicity Card
Pay no annual fee for life and receive free bottles of wine from Citibank Dining Program.
0% p.a. for 6 months 19.99% p.a. $0 p.a. Go to site More info
NAB Low Rate Credit Card
Receive up to 55 days interest-free on purchases and access to Visa Global Customer Assistance Services.
0% p.a. for 18 months with 3% balance transfer fee 13.99% p.a. $59 p.a. Go to site More info
Virgin Money Low Rate Credit Card
Enjoy a low ongoing purchase rate and the optional protection of CreditShield Edge.
0% p.a. for 12 months 11.99% p.a. $99 p.a. Go to site More info
American Express Explorer® Credit Card
Receive 50,000 Membership Rewards Bonus Points on eligible spend within the first 3 months of card membership.
0% p.a. for 12 months with 1% balance transfer fee 20.74% p.a. $395 p.a. Go to site More info
American Express Essential®  Credit Card
Earn 1.00 Membership Rewards point per $1 spent on eligible purchases.
0% p.a. for 12 months with 1% balance transfer fee 14.99% p.a. $0 p.a. Go to site More info
Bankwest Breeze Mastercard
Offers a low ongoing purchase rate and up to 55 days interest-free on purchases.
0% p.a. for 21 months with 2% balance transfer fee 12.99% p.a. $59 p.a. Go to site More info
ANZ Low Rate Platinum
A platinum card with a competitive low rate and a range of complimentary insurances.
0% p.a. for 16 months with 2% balance transfer fee 11.49% p.a. $99 p.a. Go to site More info
BankSA Vertigo Visa
Save with a low ongoing purchase rate and enjoy up to 55 days interest-free.
0% p.a. for 14 months 13.24% p.a. $0 p.a. annual fee for the first year ($55 p.a. thereafter) Go to site More info
Bank of Melbourne Vertigo Platinum
Receive a range of complimentary insurances and access to a 24/7 Visa Platinum Concierge.
0% p.a. for 20 months 12.74% p.a. $99 p.a. Go to site More info
Woolworths Everyday Platinum Credit Card
Receive a $100 eGift Card when you apply by 30 June 2017 and make an eligible purchase by 31 July 2017.
0% p.a. for 14 months 19.99% p.a. $0 p.a. annual fee for the first year ($49 p.a. thereafter) Go to site More info
American Express Velocity Platinum Card
Take off sooner with up to 2.5 Velocity Points per $1 spent and receive a complimentary Virgin Australia return domestic flight every year.
0% p.a. for 12 months with 1% balance transfer fee 20.74% p.a. $375 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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