Credit card rates are increasing, and with most credit cards about to get a workout over Christmas, many people just like you, are afraid of blowing over their budget. But, you can beat the fear of added financial stress this Christmas with careful planning.
Australian Credit Card Debt
Before you hit the shops this Christmas think about your budget and put the brakes on your spending. Why? Well Australian credit card debt is growing with more than $48 billion owed in September of 2013, and over $49 billion in September of 2014. Of this amount, more than $34 billion is accruing interest.
What’s even more alarming is credit card interest rates are increasing despite historically low interest rates being witnessed. In fact, most credit card interest rates have risen by as much as 1.5 percent over the last year to 16.96 percent. Some newer cards have an 18.58 percent rate.
The average credit card bill for Australians is over $2,000. The interest incurred on this is around $34 a month, or approximately $400 a year on average.
However, if you use your card wisely and pay your debt off, then your credit card can be a useful tool. This is providing you watch your spending and know when it’s time to pay back what you owe, rather than continually buying.
Cutting Your Credit Card Interest Payments
Cutting the amount of interest you pay on your credit card can be done in a number of ways. The methods that are the most effective are those that fit in with your lifestyle and spending habits. Of course, if you ever feel that your spending is ‘out of control’, then stop spending and concentrate your efforts on reducing your credit card debt.
The best credit card debt and interest payment reducing methods are as follows:
1. Pay more than the minimum monthly payment – Pay as much as possible off your credit card monthly. This then allows you to reduce the amount you owe, which, in turn, reduces your interest.
2. Take advantage of zero percent interest offers – In order to gain your business, many credit card companies will offer you a ‘honeymoon’ period. This is where you pay no interest for 6, 12 or even 18-months on any credit card balance transfers you make from one card to another. But, be wary of the terms and conditions associated with these offers, and always check what interest rate you’ll pay after the ‘honeymoon’ period is over.
3. Use your ‘interest free’ period – Most credit cards give you an ‘interest free’ period of 30 to 60-days where you don’t pay any interest on purchases made over this time. To take advantage of this, pay off what you owe on your credit card within this period. This way you’ll incur no interest.
Buy smart and spend wisely this Christmas and reduce your financial stress. Follow eChoice’s ‘hot tips’ and laugh your way into the New Year.
Written by eChoice