Get on top of debt! 4 smart ways to pay off your credit card
Tuesday 28 April 2020
Having credit card debt isn’t fun. And in the current financial climate, debt may be looking even more unpleasant than it did before.
While some credit card providers have cut rates or introduced COVID-19 repayment relief packages, the truth is, others have not.
“During this time it’s important for struggling Aussies to get in touch with their credit card provider to see what COVID-19 relief packages they have on offer, such as financial hardship support,” Mozo Director, Kirsty Lamont said.
“In saying that, it is also crucial that credit card holders familiarise themselves with smart ways to pay down their debt, so that when the time comes, they are fully equipped to do so.”
So, with that in mind, here are some savvy ways to stay on top of your credit card debt and kick it to the curb as soon as you can.
1. Start small to get the ball rolling
When it comes to paying off your credit card debt and making monthly repayments there are a couple of golden rules to go by.
Golden rule #1: Always pay at least the minimum amount (plus more, if you can).
Golden rule #2: Don’t be late on your repayments (or you could be slapped with late payment fees on top of any interest you accrue).
The truth is, if you’re facing more than just a small handful of debt, it may be unrealistic to knock it off all at once. So, to start off, chipping away at it slowly might be a great way to get you in the groove.
However, while paying down your smallest debts first may motivate you to keep going, it’s important to keep building on your repayments and let the chips get bigger over time. That way, the amount you are accruing interest on lessens at a faster rate and before you know it, your debt could be far behind you!
RELATED GUIDE: 9 Steps to Pay Off Credit Card Debt
2. Say goodbye to multiple credit cards
What’s worse than having debt on a credit card? Having debt on two credit cards!
If your wallet is packed to the rafters with two or more credit cards, it could be time to get out the scissors and bid farewell to what you don’t need.
When it comes to deciding which credit card you should pay off first, it’s a good idea to clear the debt on the card with the highest interest rate before the others.
For example, if it were between a low rate 12.00% credit card or a platinum 20.00% rewards card, it’d be clever to focus on the rewards card first. That way you’ll ultimately be paying less interest over the time it takes you to pay down each card.
Just bear in mind though, avoid neglecting your other cards as you concentrate on paying down the higher-interest card. Remember to keep making the minimum payment across all of your cards month to month to avoid late fees.
3. Take control of your spending and cut down your credit limit
The easiest way to accrue more debt on your credit card is to spend more on it, so why not cut out the temptation?
Get in touch with your credit card provider and ask to minimise your credit limit - that way you won’t be able to spend on the card even if you wanted to.
4. Why not go interest-free for a while?
If you feel you aren’t getting a good deal on your current credit card and need a little bit of time to pay down your debt interest-free, a balance transfer offer may be the ticket.
These cards are designed to help customers pay down their debt by offering a no-interest period of anywhere from six to 26 months.
The catch here is, any purchases you make on the card during the balance transfer offer will not be interest-free. For these transactions, you will often face the purchase rate or the even higher cash advance rate. So it’s important to lock the balance transfer card away, and just focus on clearing your debt rather than spending.
Want to check out some hot balance transfer offers? Check out the table below or jump over to our credit card comparison tool for more options!