Is your credit card debt out of control? Are you in over your head with missed repayments, high interest and mounting fees? It sounds like you have fallen into the credit card debt trap!
According to the Australian Debt Clock, 55% of Australians have credit card debt and we collectively owe close to $50 billion. The average amount of a single credit card debt in Australia is $3700 and more than 8 million Aussies have at least 2 cards. If you think that sounds like a lot of money, you are right! Especially considering 80% of credit card owners are earning less than $45,000 per year. With figures like these, it isn't any wonder more and more people are struggling with their credit card debt repayments?
Credit Card Debt in Australia
More often than not, it all starts with one bill. One emergency purchase you didn't see coming and you simply must put it on your credit card. Before you know it, you are stuck chasing your tail, paying off your credit card, but then using your credit card to pay your bills. Then around you go until you reach your credit limit and you have no idea where to turn. Sound familiar? This is the credit card debt trap and thousands of Aussies find themselves in this situation every year.
Credit Card Debt Warning Signs
Many people don't realise they are struggling with their finances until it's too late. Being experts in debt management, Revive Financial is able to pin point some warning signs indicating when your credit card is getting out of control. You could be experiencing one, or several of the following points. If this is the case, you could be at risk of falling into a credit card debt trap:
- You don't know when your bills are due and have to rely on your credit card to pay unexpected debts
- You don't consider the repayments before using your card to make a purchase
- You don't know exactly how much you owe on your credit card
- You have several credit cards, all owing money
- You never seem to have money left at the end of your pay week.
If this sounds like you, don't worry. There are some things you can do to get your spending under control.
How to Pay Off Your Credit Card Debt
You might owe hundreds or thousands of dollars to your credit card, but the fact you are here means you have taken the first step towards paying off your debt. Here are a few more things you can do to pay down your credit card debt.
Stop Using Your Card
There is no point paying off your debt one day and then putting it back on your card the next. To get rid of your credit card debt once and for all, stop using your card. If you rely on your card for essential expenses, like paying bills, you should plan ahead with a budget to ensure you can pay these costs without your card. If you are still unable to pay your bills with a budget in place, you may need to look at a Part 9 Debt Agreement.
Pay More than the Minimum
The minimum repayment amount is calculated to benefit your credit card supplier. By only paying the minimum, you will end up paying thousands of dollars in interest and it could take decades to repay your debt. Pay as much as you can possibly afford each pay cycle. Be sure you aren't leaving yourself short-changed for your other expenses. A budget will help with this process.
Automate Repayments
Once you have worked out a budget and know how much you can afford to repay, set up a direct debit each pay day from your bank account to your credit card.
Credit Card Debt Consolidation
If you have more than one credit card or your credit card is impacting your ability to repay other personal loans, you might be able to consolidate your balances onto one card. Many banks will offer a credit card with a 0% interest rate on balance transfers for a set period of time. This form of credit card debt consolidation is to transfer the balance of your existing cards onto this new card and it will give you an interest free period to pay off your debt. It could be anywhere from 3 to 12 months. When you apply for a 0% balance transfer card, always ask the maximum amount you can transfer as you might only be able to transfer a portion of your debts to this card. If this is the case, pay off the remaining debt from your old cards aggressively and move onto your interest free debt once the others have been repaid.
If Your Debts are Out of Control
Sometimes, you just have to admit that your debts have got away from you and you need help to bring them back under control. Every credit card statement must now show how long it will take to repay your debt when making the minimum repayments and for some people, it will take more than 100 years! You don't have to struggle week-by-week trying to make ends meet. There are options out there to help you get your debt back under control, lift the weight off your shoulders and help you to live again!
One of the best options to tame unruly credit card debts is with a Part 9 Debt Agreement. This legally binding document is legislated under the Bankruptcy Act and it allows you to renegotiate the terms of your debts to make them more affordable. If you want to learn about taking control of your credit card debt, give us a call on 1800 534 534 or fill in the online enquiry form. One of our dedicated case managers will be in touch to learn about your situation and provide a personalised debt relief plan to help you get out of debt and stay there!
