How to clear your credit card debt by the end of the year

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Credit card debt certainly has a way of creeping up on us. A recent RateCity survey found one in three Aussies between the ages of 55 and 64 have more than $1000 in credit card debt, while one in 20 have more than $10,000.

With Christmas on its way, you may think adding to that debt is inevitable, but there are ways to do the opposite, and reduce it to zero, before the silly season comes. The key is to significantly reduce spending over the next 10 weeks and to channel any excess money into your debts. The following tips may help.

Transfer any high interest debt to a low interest card
It’s very difficult to pay down debt when any dent you make is negated by a high interest rate. You may have made big sacrifices to pay off $100, but when you get an interest bill of $80 at the end of the month, it doesn’t feel great. If you have mounting debt, you may wish to consider putting it on a low interest or 55-day interest free card, so that money you put onto the card actually goes towards your balance.

Try to reduce spending by 20 per cent for eight weeks before Christmas
This is an ambitious plan, but if you have a typical credit card debt of around $1000 and a household weekly spend of $600, you could pay off 96 per cent of it by Christmas by trimming your budget by $160 a week for eight weeks. If you start now, that still leaves you two spare weeks before Christmas to do your shopping.

Cut out two discretionary items per week
We all have little luxuries that get us through the days and weeks. But having a bit of a pre-Christmas Lent and trimming back on one or two of them could help you to save several hundreds of dollars a week, depending on your vice of choice. Say you buy two coffees a day at a café, if you cut out one, that’s a saving of around $25 a week or $250 over 10 weeks.

Reassess direct debits
Subscription services, whether its media streaming, wine of the month club or a public transport card top up, certainly make life more convenient, but over a month they can add hundreds to your credit card bill. Spend a few hours reviewing how much is drained from your account through automatic payments and try to roll that back, at least temporarily. It could help you to slice your credit card debt. Good luck!

This article was produced by financial comparison website RateCity.

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Total Comments: 13
  1. 0

    Not everyone can pay off their credit cards each month so these are very good suggestions. I particularly like the idea is of reviewing direct debits. As well as reviewing the need, also if you can get the same items eg insurances cheaper

    • 0

      If you can’t afford to pay it off at the end of the month then you can’t afford to have the credit card. It means you are living beyond your means regardless of what the money is spent on. If you can’t control spending, then cut up the card and use cash. That way you cannot spend what you don’t have.Not paying off credits cards is THE most expensive way to borrow money and no-one needs that.

    • 0

      Hear hear KSS ! If you don’t have the cash stashed to back up the credit card purchases, don’t use it. Help shaft the banks by paying the credit card off in full EVERY month !

  2. 0

    Just don’t use your credit card, use debit card, don’t spend money you don’t have.

  3. 0

    Who wrote that ? 🙂
    Cut out the Lattés at the Café ? 🙂 What The ??
    I love all the Millionaires commenting on these Posts. 🙂 🙂
    I want to hear from some Serfs with Credit Cards and Debt up to their Eyeballs 🙁 🙁
    But all I read is Tut Tut Posts 🙂 🙂 🙂
    Must be all Retired Politicians 🙂 🙂

  4. 0

    Transferring a balance to a no interest card is a good idea BUT you must really be disciplined and virtually cut up the new card while working down the debt – it takes discipline.

  5. 0

    Love my credit cards. Save me worrying about how much money I need and then sourcing it. Also the free flight every year is a real bonus. Cost me nothing but give me heaps.

    • 0

      You’re not wrong there Old Geezer, every year we fly both domestically and internationally on the old Qantas FF points, good value reward from the credit card. We’re not rich, nowhere near it, we’ve just got our lives organised properly.

    • 0

      Yes I manage a flight or two each year using FF but it does cost me an annual fee of $95.

      I have only two direct debits from my saving account one to pay health insurance and one to pay the credit card at another bank so I never have to worry about it being paid in full even when travelling for extended periods.

      Using a credit card also makes it easy to track spending and is useful for purchases online for tickets, accommodation etc.

    • 0

      Its living on Borrowed Time 🙂

  6. 0

    KSS ‘s comment is true in one sense but ridiculous in the other. Firstly perhaps the reason for a credit card is the income per week or month is too low to repay each month. So saying you SHOULDN’T have one at all is stupid at best.
    The fact that some people are living within their means but use a credit card sensibly they will survive and get through and eventually catch up. And then keep a regular set up going for direct debits and other bills etc. Some max them out they are silly.
    But , I do find people like KSS who have this “you are more stupid than me” kind of advice, to throw around on a forum like this , saying you shouldn’t have credit at all, very very annoying when they have no idea of the thousands of other credit users personal situations and who are not that well off in this capitalistic system we try to survive in.
    BUT! Actually do get by with the proper use of a credit card but may not every month hit the target. Its life. Fools with 10,000 dollars debts are fools yes , they are not people trying to get by in today’s world .They are OVER THE TOP! Most aren’t!!
    Credit cards, used properly, are a great thing in a world where every thing is so dear, so that the world of business make huge profits for just a few. That’s another story?
    Every one lives on the never never , because no one can buy a house or a car or even a fridge, out of their back pocket, at all.
    Thanks for the creditcard advice in the article Life Choices, its helpful.
    And I’m following a pattern to keep in front.

    • 0

      I’m just keeping my nose above water now ! And I’m seriously considering getting one !! I’ll buy Lotto with it and hope to Hell I win to pay the Monthly Bill 🙂



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