Help, my credit cards have taken over

How to get yourself out of credit card debt.

If it feels like your credit card balance has taken over each month, these useful tips could help. 

While it can be convenient to put bills and direct debts on a credit card, if you’re no longer able to pay in full each month, you may need to consider adjusting your budget. 

Below are some tips to help you get control of your credit card debt and carve a path to minimising stress and using credit cards responsibly. 

1. Pay off as much of your balance as you can, every month

It can be easy to default to just paying the minimum repayment, but this behaviour can have nasty consequences. For example, if you owe $5000 on your credit card at an 18% interest rate, and you only make the minimum repayments, decreasing from $102, it could take you up to 33 years to clear the debt with total repayments of $17,181. 

If paying the full amount is not possible, try and pay off as much as you can. If we take the same $5000 credit card as an example, a repayment of $246 per month would see the debt cleared within two years. 

If you are unable to pay off your balance each month, it means you are spending too much, and you need to review your budget. 

2. Do not make late repayments 

Making late repayments can affect your credit rating as it’s considered poor account conduct. You may also be slogged with large late repayment fees, which further adds to your balance and compounds your debt problem. 

3. Make a plan 

Sit down and work through your credit card debt, expenses and budget. To reduce your overall credit card debt, avoid using your credit cards for everyday purchases and reserve it for genuine emergencies. 

For those with multiple credit cards with debt, try and make extra repayments to the credit card debt with the highest interest rate first, while maintaining at least minimum payments on all other cards. Once you pay off a chunk of your credit card, decrease the credit limit and get that extra debt out of your life for good. 

Remember to cut up your credit card and close the account once it’s all paid off.

The key to getting your credit cards under control lies within your budget and your ability to keep track and control of your spending. Once you can get a solid budget running and save money, you will have additional funds to put towards debt repayment. Be kind to yourself, persevere and keep moving towards your goal. 

The information in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in the document is general advice and does not take into account any person's particular investment objectives, financial situation or needs. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives, financial situations and needs.