If you’re like millions of other Australians, you might have been tempted by a credit card offer with sweet airport lounge access or a low “introductory” rate. It may have come at just the right time and helped you splurge on a holiday or save a little bit on your purchase.
Fast forward to today: the introductory rate has disappeared and you may have a sizable balance on each of those cards. Oopsies.
Remember, if it seems too good to be true, it probably is. We’re glad you’re here, because it’s time you come up with a plan of attack.
Here are a few steps that could help tackle pesky credit card debt.
1. Stop using your credit card.
This is pretty straightforward, but it’s also easier said than done. Stop using your credit cards as soon as you can, because it will be that much easier to achieve your ultimate debt-free goal if you do. Plus, cutting up your credit cards feels pretty darn cathartic. Just saying.
2. Get organised.
A lot of people fall into the trap of spending more than they earn by using various credit cards. If you’ve never created a budget, you can search online for free tools that can help you. Make sure to account for: your rent or mortgage, utilities, transportation, food, eating out, clothing, childcare and other key expenses that come up every month. Then, factor in less common costs that may pop up from time to time. These could include weekend getaways or amounts set aside for shopping or nights out. You still gotta live your life after all!
3. Develop a strategy.
Once you know how much debt you need to pay off, you can try out a debt repayment strategy. The primary goal is to pay it off as quickly and painlessly as possible, and there are a number of different ways to do that. You could try the Snowball Method, which means paying down your debts in order of size. Or the Avalanche Method, which prioritises your payments by interest rate.
4. Consider debt consolidation.
First of all, debt consolidation simply means bringing multiple debts together into one payment via a personal loan with a reasonable interest rate. This can be a helpful option for people with multiple credit cards since it makes the payments more manageable. If you are starting to feel overwhelmed by your debts, you can read more about Wisr debt consolidation loans here.
5. Use technology to your advantage.
6. Track your progress.
Keep up with your new budget and keep a close eye on cash flow. It’s important to try and have more coming in than going out. Make a note on your calendar to check progress on a regular basis. As you see the situation improving, this will give you more encouragement and help you to stay on track for the long term.
7. Stick with it.
And repeat. You’d be amazed how much progress you can make with a little tenacity and a proper strategy. As time goes by, you may notice your credit card debt gradually disappearing, and your credit rating improving at the same time.
Before you start, check your credit scores so that you know where you stand today, and you can see how much your scores improve as you progress.