Australians put a whopping $325 billion on plastic in 2017, with the nation’s combined credit card balance an eye-popping $52.2 billion at year’s end, according to the Australian Banking Association (ABA). Based on the Australian Bureau of Statistics’ (ABS) estimate of 9.2 million Australian households in 2016, that equals an eye-popping average debt of around $5,674 per home.
How much of that staggering number did you rack up? Do you even know? If you don’t, you are not alone. Checking your credit card balance can be a bit like stepping on the scales after Christmas lunch. But before we can fix the problem, you need to know where you stand.
It is true that not all credit card purchases are bad. When used appropriately, putting it on the fantastic plastic is an extremely convenient way to access instant money; to book that overseas holiday, buy that beautiful flat screen television or pay a bill. But that convenience comes at a steep price if you are one of the millions of Aussies who use their credit card – or more likely credit cards – incorrectly. Based on Australia’s average household debt of $5,674 mentioned above, interest repayments would be a hefty $965, calculated at a rate of 17 percent. Can you think of a better use for those hard-earned dollars?
But enough of the bad news. With discipline and a few good habits, your slice of Australia’s obscene credit card balance will head south in a hurry. Start by breaking the cycle of only paying the minimum monthly payment. The perfect play is to pay the full balance each month to avoid incurring any interest. But if that isn’t possible right now, try least to contribute more than the minimum payment to start trimming your total balance.
Taking the temptation away is another important, and achievable, step. If you have multiple cards, consider cutting down to one and resist the constant invitations from your friendly banker to add another piece of plastic to your arsenal. And do you really need that $20,000 limit? Consider reducing your maximum limit immediately. If you are trying to shed a few kilograms, stacking the kitchen cupboard with chips probably isn’t the most prudent plan. Likewise, having thousands of dollars of ‘free money’ lurking in your wallet or purse is unwise. If you can’t quite bring yourself to cut up your second or third card, at the very least, consider shopping around for a better interest rate – unless, of course, donating to your bank’s bottom line gives you pleasure.
If you are unsure of your next move or want more great tips to conquer your debt and start kicking financial goals, contact Astute Ability Finance Group today.
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