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Three ways you can avoid paying interest on your credit card debt


The lower the interest, the more in your wallet.

The average credit card holder in Australia has a balance of $1,990 gathering interest. If you were to pay this off over two years, you'd be paying $380 extra.

Here are three ways you can avoid paying interest while you're hacking away at that credit card debt.

1. Take out a personal loan

This is a good option if you have a weakness for sales: close your credit card account completely and pay it off with a personal loan. You will pay less interest for a loan than you will for credit card debt, but with most loans having interest rates around 10% or more, you’ll still be paying over $100 in interest if you pay off our balance within a year.

2. Apply for a 0% balance transfer card

The best way to avoid paying any interest on your debt is to apply for a new card with 0% balance transfer. There are currently over 150 of these cards available, and most banks offer a product with this feature. While the interest free period varies, two thirds of the cards on the market will give you a whole year or more interest free if you transfer your balance.

Remember however, this is not a licence to ignore your debt. Often, 0% balance transfer cards will have a higher base interest rate than other cards, so it’s important that you commit to paying off all your debt in the interest free period, and resist the temptation to go on a spending spree with your new card!

3. Transfer your credit card debt to you mortgage

Finally, there is a third option available if you are currently paying off a mortgage. You can transfer the outstanding card balance to your outstanding mortgage balance. This is not interest free, but will let you pay off your credit card debt at a much lower interest rate. If your mortgage interest rate is 5%, you’ll only end up paying about $50 in interest.

However, be careful here. Make sure to add extra to your repayments to pay off this debt. If you let the debt sit on your mortgage long term, you could end up paying a lot more. This option is especially suitable if you are unable to get a 0% balance transfer card due to bad credit history.

Whatever your situation, make sure you don’t end up paying a “lazy tax” through inaction. Check out finder's detailed guide to 0% balance transfer cards.

Graham Cooke's Insights Blog examines issues affecting the Australian consumer. It appears regularly on

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