Do you have a Christmas credit card debt hangover?
Almost half of all Aussies will fail to repay their Christmas credit card spending within their interest-free period.
News Limited reported this week that four million Australians spent an average of $2,700 on their credit cards over Christmas. The main items that Aussies put on their plastic cards during their holidays away were shopping and luxury hotels.
Almost half of these credit card users say they will not pay their credit card debt off within a month. 400,000 Aussies say they expect to take longer than a year to pay off their debts. In that time they will face big interest bills, totalling $180 million, all of which goes straight from their family budget to boost bank profits.
Young people and women are reportedly most likely to struggle with repaying their Christmas holiday credit card debts.
Are you struggling to work out how to repay your holiday credit card debt?
First of all, if you have lost your job or some other issue is preventing you from meeting your normal financial obligations, you may be able to claim financial hardship assistance from your credit card issuer. Call a free, government funded, financial counsellor for advice on 1800 007 007.
If, like most of us, you have simply overspent during the holidays on the good life and now face a debt hangover, you need to take control of the situation and make a plan. Putting the problem off until next month is a sure fire recipe for an escalating debt problem. This won’t go away and will just get more expensive the longer you put your head in the sand and try to ignore the problem.
What are your options for dealing with a Christmas credit card debt hangover?
As long as you have an income you have options. Even a big credit card can be repaid without any interest charges at all!
1) Calculate your task ahead
You can use the InfoChoice Credit Card Repayment Calculator to work out how much you need to find to repay your credit card debt. Enter your balance outstanding, the interest rate and fees on your card to find out what your repayments need to be to eat into your debt.
2) Investigate a low interest or zero interest balance transfer credit card.
Right now, Infochoice lists 113 credit cards with balance transfer offers Some of these cards offer two years of no interest on balances transferred at the time of approval. For example:
The NAB Premium Visa Credit Card offers 24 months interest free with a one off 3 per cent fee and an annual fee of $90.
The Bankwest Breeze Platinum Mastercard offers 21 months interest free with a $99 annual fee.
The Qantas American Express Discovery Card offer 12 months of zero interest with no annual fee, plus you can earn QFF points.
3) Consider a debt consolidation personal loan
If you have large credit card debts, or more than one unsecured debt, a personal loan might be the cheapest option for you. A personal loan usually offers a lower rate than the average credit card and gives you a set repayment schedule and a time frame for the elimination of your debt. A personal loan also, usually, doesn’t allow you to build up more debt.
InfoChoice lists almost eighty debt consolidation personal loans. For example:
RateSetter’s Unsecured Personal Loan offers a variable rate starting at 4.04 per cent for borrowers with an excellent credit history.
CUA’s Unsecured Variable Personal Loan charges a variable rate of 11.89 per cent.
Commonwealth Bank’s Variable Rate Personal Loan has a variable rate of 13.90 per cent.
4) Mortgage refinancing
For larger debts, you may want to look at refinancing your home loan to add in your consumer debts. This will give you a lower rate on your debt, but you will spread the debt over the 25 or 30 years of the home loan term, so you will pay more in the long run. InfoChoice lists more than 1,000 home loan products and options from all of Australia’s significant mortgage lenders.
Whatever plan you make, take control now, with InfoChoice and don’t let your Christmas debt hangover become a real problem.