Do you have multiple credit card debts?

For credit cardholders with more than one credit card debt, making the monthly repayments can be difficult. Right now, Aussies collectively owe $51.3 billion on credit cards. With credit card interest rates often more than 20 per cent, you could be adding thousands of dollars each year to your credit card debts by not repaying them within the interest free days provided.

Making just the minimum monthly repayments on large credit card debts may help you avoid late payment fees and extra interest but will not make significant headway into the debt quickly. You need to find a way to take control and break the credit card debt cycle.

Help! How can I repay multiple credit card debts?

The Australian Securities and Investment Commission’s MoneySmart financial literacy information service advises people with more than one credit card debt to:

1) Ensure you are making the minimum repayments on each credit card each month. (This is usually about 2 per cent of the total debt outstanding).

2) Stop spending on all but one of your credit cards.

3) Focus on repaying the credit card with the highest interest rate by making more than just the minimum monthly repayments.

4) Or you may like to repay the smallest credit card debt first to get it out of the way and feel like you are making progress.

National Australia Bank’s Angus Gilfillan said credit card users could stop taking their credit cards with them in their purse or wallet to avoid the temptation of using it.

What about a balance transfer credit card?

A low or zero rate balance transfer credit card can be a good way to get some breathing space from high interest charges and help you get on top of your debts. However you do need to be disciplined to make a balance transfer deal work for you.

What is balance transfer?

A balance transfer credit card is a card that offers you a special low rate (often zero) for a set introductory period on debts that you transfer to the card at the time of applying. These can be other credit card debts, store credit or unsecured personal loans. The balance transfer rate does not apply to new purchases you make on your new credit card. The balance transfer rate may revert to a much higher rate, perhaps the cash advance rate, when the introductory period has expired.

National Australia Bank’s Angus Gilfillan told News Limited that balance transfer credit cards allow a cardholder to transfer debt from one card to another and pay it off during the honeymoon interest-free period.

“Pay an extra $50 a week on top of your minimum repayment, and you’ll be surprised to see how quickly you can pay it all off.”

How to use balance transfer to reduce your credit card debt …

There are currently 103 balance transfer credit card deals being offered in Australia right now.

National Australia Bank’s Angus Gilfillan said people using balance transfer credit cards still need to make the minimum monthly repayments, or risk losing their honeymoon deal.

Importantly, people in debt need to rein in their spending to avoid adding to their debt problem while they are trying to repay it.

When you have repaid one credit card, you may like to consider cutting it up or contacting the issuer to cancel the card.

Choosing a good balance transfer credit card deal

InfoChoice lists 103 balance transfer credit card deals now being offered by banks and credit unions in Australia. The longest interest free balance transfer periods are around 18 months. Check for conditions and fees to ensure you are getting a deal that suits you. Here are some good deals, now available, to help you compare balance transfer credit cards:

The National Australia Bank Low Fee Visa Card has a balance transfer rate of 0 per cent for 15 months and a purchase rate of 0 per cent for 15 months as well.

The Bank of Melbourne’s Vertigo Visa card is currently offering a balance transfer rate of 0 per cent for 18 months and an introductory purchase interest rate of 1 per cent for 12 months. This card is also available from St George Bank and BankSA.

The CUA Low Rate Mastercard credit card has a 0 per cent balance transfer rate for the first 13 months.

The Commonwealth Bank’s Student Mastercard Credit Card has no annual fee and a balance transfer rate of 5.99 per cent for six months.

You can compare credit cards from all of Australia’s major banks and credit unions here.


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