March 20, 2014
Credit cards are great…. They provide access worldwide to funds quickly and conveniently at just about every place you can spend money. However the easy access to funds that credit cards provide has a dark side.
Spending more than you can afford, getting in over your head and living beyond your means are all terms used to describe someone who has failed to manage the use of their credit cards. In our office we regularly see this firsthand, with clients racking up tens of thousands of dollars on credit cards and no ability to repay the debt.
It was no surprise then that Mortgage Choice’s inaugural Money Survey* found that of people with a credit card debt, 32.8% owed more than $5,000. This is especially concerning when so many will only be making the minimum repayment each month rather than paying off the debt in full each month.
Did you know that to pay off a $5,000 credit card debt with an interest rate of 14% by making the minimum repayment each month would take 21 years and 11 months and cost almost $11,000?**
If this is you or you are concerned about your own financial situation, there are a few things you can do to help get yourself back on the path to financial freedom.
Consolidate your debts – By consolidating your debts, you not only reduce the amount of interest you are paying but also make managing your financial situation so much easier.
Refinance your debts – Refinancing to a lower rate, whether that’s into a home loan or personal loan will reduce your monthly interest charges.
Aim for debit not credit – Make paying off your credit card a priority, then cancel it and try using a debit card instead.
Get a home loan health check – If you have a home loan, then getting one of our team to conduct a home loan health check is a good idea. With interest rates at record lows and lenders offering competitive deals, there may be another product on the market that is better priced and suited to your needs. We may be able to also consolidate and refinance your other debts into your home loan.
For further assistance please call us on 9432 6070 or click on the ‘contact us’ tab at the top of this page.
*About the survey
Market research company Nine Rewards was commissioned by Mortgage Choice to conduct the 2014 Money Survey. The online survey was conducted in late February 2014 and completed by 1,064 Australians from a range of financial backgrounds including first homeowner, next homeowner, homeowner and investor, investor only and not a mortgage holder.
**Example calculated via the credit card calculator on the government’s Money Smart website: https://www.moneysmart.gov.au/tools-and-resources/calculators-and-tools/credit-card-calculator