Debt Consolidation & Credit Cards

Credit Card Management

Total Australian credit card debt in April 2009 has passed $45.4 billion. This is equal to an average debt of $3149 for every cardholder in Australia. Some people have only a couple of hundred dollars of debt on their credit cards but some have $40,000 or more.

Rising unemployment and a looming recession is forcing many Australians to cut back on their credit card repayments. Rising prices of groceries and fuel have a big impact on low income earners and their ability to service credit card debt.

By deferring the repayments from month to month they are hit with late fees on top of their interest. So, their debt is rising even without spending any money.

Most of the credit card companies require consumer to only pay the minimum payment on the outstanding balance. In this way the consumer will be paying of their credit card for the longest period of time.

For example if your outstanding balance is $5,000 the minimum monthly payments would be about $80. (This amount will depend on your interest rate). If you are only paying the minimum payments it could take up to 25 years and thousands of dollars in interest.

So, the message here is, be careful with your credit card spending.

If you are already in a credit card mess you should make a plan how to get out of it.

Create a financial plan with all your income and spending.
Include everything what you spend each month: rent, mortgage, credit card repayments, personal; loan repayments, electricity, fuel, telephone, gas, food, entertainment, postage, coffee, etc. Compare that with your monthly income and see if you are spending more than you earn and using your credit card to cover the shortfall.

When you deduct all the monthly outgoing money from your monthly income and you have some money left you could put that money towards your credit card debt.

If you are using your credit card to supplement your income you are in a financial trouble. Go carefully through all your outgoings and identify where you can cut down your costs.

You can eliminate or minimize unnecessary expenses such as: buying coffee in a coffee shop, fast food, expensive internet or cable TV services. You don't have to eliminate everything you enjoy, but you could buy less often those items or find a cheaper alternative.

You could contact your bank directly and try to change your repayments or interest rates. If you are not comfortable with doing that just contact one of our debt consolidation experts and we will do it for you.

Another option is to consolidate your credit card debt into a personal loan and reduce your interest rate and the repayments. Again, contact us to help you with your debt consolidation. Remember, you can can consolidate your debt into a single personal loan or into your mortgage.

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