Posted on 2017-12-08
In June 2016, a finder.com survey found that over 70% of Australians have credit cards, and 20% of those surveyed aged between 35-54 had three or more credit cards in use.
Having a credit card, or cards, is pretty common. It’s only when the spending isn’t structured that it can become a problem and start to put real pressure on day to day living expenses.
Credit card interest can grow quite quickly if repayments are missed. It happens, but there are ways to re-direct your credit card debt before you are faced with a default or a larger debt that may be more difficult to pay.
Here’s what you can do:
Talk to your current lender, or a new one, about transferring the balance of your credit card debt to a 0 percent balance transfer credit card that will charge no interest for a given period of time (usually a promotional period between 6 and 24 months). If you are in debt, we would strongly advise that you do not make purchases on the balance transfer credit card, rather, use the opportunity to pay off the debt within the promotional period. This can save you a lot in the long run and take some pressure off the day to day.
If you have multiple credit cards of a higher value a better option can be to consolidate your debt into a low rate personal loan. Generally, personal loans have lower interest rates than credit cards and you can end up saving both time and money by paying one larger debt at a lower interest rate, than a few smaller debts at higher rates.
Having a mortgage can help when trying to consolidate credit cards debts before they get too hard to manage. This is done using the process of refinancing. Refinancing lets you access additional money which can then be used to pay out credit card debt. Like personal loans, home loans usually have lower interest rates than credit cards so you end up saving more in the long run and paying off the debt sooner.
At times, credit card debt consolidation can get tricky if you have an unusual or infrequent income stream, or if you don’t have the best credit score. This is when our team of brokers can help. Call us to discuss how you can get started.