When your credit card bill arrives in the mail, do you open the letter with a nervous knot in the pit of your stomach? If you feel like you’re struggling under the weight of your credit card debt, take comfort in the fact that you’re not alone: according to the Reserve Bank of Australia, the average Aussie credit card balance is currently $3,250 per person.
Credit card debt
Credit card debts can be a serious burden — but the good news is, there is light at the end of the tunnel. These five tips will help you manage your credit card debt and take control of your finances from here on out:
Cut up your credit cards
According to Fox Symes, Australia’s largest provider of debt solutions, it’s possible to reduce your credit card debt — and the very first step is removing temptation. In order to get off the debt cycle, they recommend that you go as far as cutting up your credit card, so you can avoid topping the balance back up with new purchases while you concentrate on paying the debt off. Another option is to simply remove the cards from your wallet and store them in a safe place.
Forget the rewards
There are many credit cards that offer rewards programs and bonus schemes as an incentive to use them more frequently. The catch? Credit cards attached to rewards schemes usually attract high annual card fees — and a higher interest rate.
To add insult to injury, the number of rewards points you can accrue is often capped or reduced at a certain level of spending. All of this means that once you factor in the high fees and interest rates, any rewards you receive may not be commensurate to the amount of money you’ve spent on your card. A better option might be a low-rate credit card that allows you to pay the debt off more quickly.