It’s now a month after Christmas and a lot of us are back at work with a Credit Card debt to pay off… After using the Credit Card to buy presents, luxury food and holidays many of us are now looking at our Credit Card statements wondering how we managed to spend so much and how we are going to be able to pay it off! Argh!
Here are my top tips to manage your Credit Card debt and get that balance paid off as soon as possible:
- Pay more than the minimum required. By only paying the minimum payments you will cover the interest but won’t make much of a difference on the balance and still have the debt next Christmas (and possibly the 20 years after that too!!)
- Cut up your Credit Card and lose the number. Just cutting up your Credit Card isn’t enough, with the amount of items you are able to buy over the internet and telephone you must lose the number too. This means also removing your Credit Card number from Paypal and all other internet payment facilities. This will ensure you don’t keep adding purchases while paying it off.
- Don’t have multiple Credit Cards. One Credit Card is enough to keep account of! Having more than one card can lead to double the debt and double the issues when trying to pay that debt off.
- Decrease the limit. As you are paying your card off decrease the limit also to ensure you can’t add any purchases. If you have a high limit approved then it will be simple to put the limit back up in the future should you need it.
- Credit Card rewards are not important. Don’t get sucked into using a high interest Credit Card because they offer reward points which can be cashed in for appliances, flights, etc. The interest you pay over time will outweigh any benefit from the rewards.
- Move to a low interest Credit Card. If you are paying high interest and can’t pay the balance then move to a low interest Credit Card. Credit Card interest can vary from 10% to 25% from card to card so don’t get stuck paying 25% when you could be paying 10% – shop around.
- Do up a personal budget to track spending and set a Credit Card repayment amount goal which must be adhered to. Revisit your budget & update at least monthly. A useful tool for personal budgeting can be found at https://www.moneysmart.gov.au/
A few other Credit Card points to consider:
- When getting a Credit Card and applying for the limit make sure the limit you get can be covered by the balance in your saving account.
- If you want more credit think about it very carefully & then apply to increase the limit for the minimum required. If you want $1,000 more don’t increase your limit by $2,500 as chances are you will use the $2,500.
- Check the transactions frequently to ensure they are all yours – this is to ensure someone else hasn’t got your number and is making purchases using your account.