As we stare into the last days of 2021, there’s some great news to come from the Reserve Bank of Australia’s (RBA) credit card data. Collectively, Australians have wiped almost $10 billion dollars of their credit card debt away over the last 18 months …
The data shows that between March 2020 and September 2021, we’ve gone to town on paying down our credit cards that cost us interest. It shows that debt levels in our country are the lowest they’ve been since 2003 and although the repayments have certainly been fuelled by the pandemic, can we stay on the straight and narrow?
With Christmas behind you, can you say you’ve gone easy on your credit card?
It can be tricky if you haven’t reduced your available balance on your card, so hopefully you have … We all know the pitfalls of high levels of credit card debt and how they can impact your borrowing power.
So our advice …
- If you’ve worked hard to reduce your debt, set a goal to keep it there – make it your new year’s resolution if you need to.
- Call your credit provider and request the balance is reduced to a comfortable level and in doing so you’ll improve your future potential to borrow for larger, more important things (like a new home or investment property).
- Pay more than the minimum monthly payment required. It could save you thousands.
- Build your budget around using money you actually have or have coming rather than what credit you’ve got. And put your credit card repayments into your budget as a priority.
- Avoid buy-now pay-later services. These can carry with them serious consequences for your credit score if you neglect the systems and even worse if you miss a payment. In fact, even by simply applying for an Afterpay account (or any of them) you can negatively impact your credit score.
- If you’ve got multiple cards or lines of credit, consider consolidating them into one, easy to remember repayment. Doing this could save you money both in the short term and the long term. This will also likely shorten the repayment time on your debt. As an example, the numbers show us that even $8,000 of credit card debt can take up to 80 years to repay if only the minimum repayments are made! 80 years!!
Although it may seem counterintuitive to borrow again to ditch your debt, it usually turns out far better for your overall financial position. Consolidation could literally be life changing for you and your finances, so create a set of goals that will see you debt free in 2022 and you’ll be laughing all the way to the bank before you know it.
If you’d like to discuss restructuring your loans, credit cards or mortgage through consolidation, speak with your @Finance Lending Specialist today – you won’t regret it. Call 1300 469 840 or send us an email to start the conversation.