Top five tips for reducing your credit card debt, faster!
Credit card debt. It can sneak up on you like a long lost relative at a wedding – you know, the one you were hoping to avoid? And much like that long lost relative, it can be pretty tough to get rid of. Throw a tight budget into the mix and knocking over a credit card debt can seem almost impossible.
If you’re looking for practical strategies to reduce or even break free of your credit card debt faster, read on.
1. Pay off more than the minimum
If you check the fine print on your credit card statement you’ll find a shocking truth: making the minimum repayment is about as effective as using a toothbrush to polish a skyscraper.
Take the average $4,080 debt on a credit card with a 20% interest rate. If you only make the minimum repayment each month, it could take you more than 40 years and $15,000 in interest to clear the debt! Paying off twice or even three time the minimum repayment each month will shave decades – literally – off your owings and see you debt free in as little as two years.
2. Pick up some extra work
With the gig economy booming, there’s never been a better time to earn those extra dollars than will help turn your credit card mountain into a molehill. Platforms like Airtasker make it easier than ever to find folks willing to pay you to assemble their flat pack furniture, clean their house, tidy their garden or even set up their new computer. Divert your earnings onto your credit card and watch your debt take a nose dive.
3. Audit your living expenses
Struggling for the spare cash you need to make those extra credit card repayments? Reviewing your monthly outgoings may help you identify savings you never knew you had! Assess your insurance policies (think health insurance, car insurance, life insurance, home and contents) – you could be paying for things you don’t actually need. Likewise your power, gas and mobile phone plans. Let iSelect sort out your life admin – we’ll take the time and hassle out of comparing options to find the best deal – and see how much you could save!
4. Re-visit your budget
There are several simple online budget calculators (like this one) that can help you get a clearer picture of your finances and identify potential savings. Even paying an extra $10 or $15 per week can help make a dent in your credit card debt. Over time, these seemingly small amounts do really add up. Paying off just $10 extra per week equates to $520 over the course of a year! HINT: set up a direct debit to make sure those little extra repayments actually happen.
5. Compare your credit card
Comparing your current card against the market may reveal significant potential savings. One option could be to transfer your credit card debt to a balance transfer card. Balance transfer cards typically offer lower interest rates for the first 12 – 24 months and can really work in your favour if you pay off as much of the balance as possible while you’re in this ‘balance transfer period’.
With many different credit cards in Australia and hundreds of different credit card products on offer from lenders, why not let iSelect help you find the credit card that’s right for you, and get credit card debt out of your life, faster!
iSelect does not compare all products in the market. Any advice provided in this content is of a general nature and does not take into account your objectives, financial situation or needs. You need to consider the appropriateness of any information or general advice we give you, having regard to your personal situation, before acting on our advice or purchasing any product.