Cut the credit card debt

December 31, 2013
Julie Browne

If credit card spending is the frequent habit you want to fix, you’re not alone. Credit card debt in Aussie land is on average a whopping $3,321 per consumer according to the Reserve Bank. Take action now and make it your New Year resolution to break the habit. Here are 5 helpful tips:

1.Calculate how much debt you currently have

Become fully aware of your credit card balance. Sounds simple but often, as this type of spending becomes habitual, some consumers don’t even look at their monthly statements! Ignoring the truth only makes things worse, the sooner you face it, the better. Being aware of what you owe could prompt you to decrease your spending. Carrying too much debt and not paying off in time can negatively affect your credit score.

2.Become more conscientious about your spending habits

One of the reasons that credit card debt is so difficult to manage is that you use credit cards more frequently than you use any other credit or any other type of unsecured loan. If it’s too easy for you to make that next purchase on your credit card, leave the card at home when you go out. No card then you can’t use it.

3.Pay down your credit cards

Determine how much you can realistically afford to pay off during the year. For best results, while you’re trying to pay down what you owe, under no circumstance add additional purchases on the card/s. If you have high interest card balances pay those off first.

4.Transfer balance to an interest free card

Some credit cards offer a zero balance transfer rate for certain periods. To make this work effectively, you must resist the urge to spend unnecessarily on that new card. Credit card balance transfer terms & conditions vary and it’s important to read the fine print, otherwise you will be pack to where you started, and your credit report may suggest you’re a credit card ‘junkie’

5. Whats wrong with cash - its the real deal

Habitual spending on credit cards and not paying in time really means you’re spending and living beyond your means. Sit down and make a realistic budget, including an amount to repay your current credit card debt. To avoid using you card for unnecessary incidental spending try to withdraw a weekly cash amount from your discretionary spending allowance, put it in your wallet/purse and use cash. Once it’s gone there is not more till the next pay day! 

Posted in: Tips

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