How to take control of your credit card debt
More than one in six consumers are struggling with credit card debt. In fact, the Australian Securities and Investments Commission’s (ASIC) recent ‘Credit card lending in Australia’ report found Aussies could have saved more than $621 million in interest in the 2016-17 fiscal year if they had carried their balance on a card with a lower interest rate.
Given these figures, it’s not surprising that Aussies want to take control of their debt. However, with changes to how credit card applications are assessed, many Australians who apply for new cards or apply to increase their credit limits may be turned down or not get the amount they have applied for. From the 1st of January 2019, when you apply for a credit card or a credit limit increase, you will need to prove to the lender that you can pay the entire balance of the card off within three years.
So here are RateSetter’s top tips on how to get on top of your high interest debt and take control of your finances.
Kick the credit card habit
Getting financially fit is just as important as your health and wellbeing. With the banks having greater access to your financial behaviour, it is crucial to take control of your debt as quickly as you can.
A balance transfer credit card is one way to consolidate debt, but it could prove costly if you don’t pay off the debt in the low interest rate promotional period. A study by RateSetter found that 47% of credit card holders found it too difficult to make more than the minimum repayments and pay off their debts during the interest free period1.
Leading peer-to-peer lender, RateSetter, offers a simpler solution; a low-rate debt consolidation loan. RateSetter can help with refinancing and consolidating high interest debt, offering flexible loan options and comparison rates that are up to 7% p.a. lower than the banks2. By consolidating your debt with RateSetter you can simplify your debt into a single monthly repayment, save with a lower interest rate, and set a date you’ll be free of credit card debt.
Debt consolidation checklist
Create a list – Assess your financial situation. Logging all your debt is a good starting point. This will help you understand what existing debts you currently have, the interest rates on each amount and what to do next.
Compare interest rates and fees – Once you’ve got a clearer view of your debts, the next step is to compare interest rates and fees. RateSetter has a debt consolidation calculator that can help you calculate your potential savings in fees and interest rates when rolling your finances into a debt consolidation loan.
Consolidate – When you’re ready to consolidate, be sure to cancel the credit cards and existing lines of credit to help you refrain from temptation – cut those cards up! Consolidating debt means there are fewer fees and less interest to pay, putting more money back in your pocket. It also means with one payment schedule, you are less likely to miss a payment.
Conquering your debt demons is easier to achieve than you think. Get financially fit with RateSetter and explore your options for debt consolidation.
- Based on 117 debt consolidation customers that responded to a survey conducted by RateSetter in July 2017.
- The bank comparison is based on interest rates and fees available from RateSetter for a $10,000, 3 year unsecured personal loan for a customer with an excellent credit history compared with the interest rates for a $10,000, 3 year fixed, unsecured personal loan product from ANZ, Westpac, Commonwealth Bank and National Australia Bank (as published on the respective bank website and excluding any temporary or special promotional offers) as at 04.30 pm, 12 February 2019. WARNING: The comparison rate applies only to the example given. Different amounts and terms will result in different comparison rates. RateSetter credit criteria and terms and conditions apply. The actual rates and fees you may be charged will depend on your loan amount, term, financial circumstances and credit history. Rates offered by RateSetter or any other lender may change at any time without notice.