6 hacks that might help pay down credit card debt faster

Sick of that credit card debt looming over your head? Or perhaps you want to start out right with your first credit card, armed with strategies to help you pay off the balance in full each month. Read on.

Here’s a handy fact. The more that's paid above the minimum repayment amount on a credit card statement each month, the faster the credit card debt should go down (assuming there are no more transactions on the account and the account doesn't incur additional fees or charges).

Yes, it could be tempting to make only the minimum repayment. But this approach could end up costing more in the long run because of the interest that can be charged.

Take a look at your credit card statement. Every statement should provide a 'Minimum Repayment Warning' which provides an estimate of how long it would take to pay off your credit card debt if you only pay the minimum amount each month (assuming there are no more transactions on the account and that fees and interest don't change). It should also show you an estimate of how much interest you could end up paying if you went down this path.

If you don’t fancy paying that interest over all those years, then you need a debt-destruction plan. Here are six things which may help to reduce or pay off credit card debt.^disclaimer

1. Using your credit card

If you choose to use the card you've transferred a balance to, beware that if you don't qualify for Interest Free Days on new purchases, those purchases can attract interest at a rate that's higher than the promotional rate.

2. Adjust your budget

Consider adding a new expense to your trusty budget. Call it ‘monthly credit card payment’. The amount? You’ll need to do some simple maths here. Look at your other financial commitments and consider what you could pay.

To keep your budget in balance, you may need to strike out some expenses. Look for non-essential items that you could do without – perhaps online streaming services, new clothes or trips to the movies?

3. Commit to the new normal

With your plan in place and a timeframe in mind, it’s time to make it work. You might want to consider tools like setting up direct debits^disclaimer, or diary entries to help you avoid missing a repayment. If you’re paying more than the minimum amount on the statement and minimising new expenses then you should start to see the impact.

4. Consider using your savings

Compare the interest you earn in a savings account to the interest you’re paying on a credit card. There could be a big difference. As in, the interest you earn on savings may be smaller than the interest you pay on your credit card debt.

If that’s the case for you, you could consider using some of your savings to wipe the debt slate clean. But doing this might not be right for everyone. You'll need to consider your finances and personal situation and should consider seeking independent professional advice to check what's best for you and your unique circumstances.

5. Consider a balance transfer

In some circumstances, moving a balance from one (or more) cards to a credit card with a lower interest rate may be one option for consolidating debt.

But it's important to know exactly what you're dealing with when it comes to a promotional balance transfer offer, because there are some things you need to be aware of before deciding if one of these offers could help you achieve these goals.

Review the offer and its terms and conditions carefully as well as the terms and conditions that apply to the card the offer applies to.

Remember, for example, if you don't pay the full amount being transferred on a promotional balance transfer offer in the promotional period then, depending on the rates that apply to the credit cards, you could end up paying a higher interest rate on the card you transfer a balance to than the one you had on your old card.

6. Talk to your credit card provider

It’s important to keep up with your credit card repayments. If you miss repayments, you could pay interest and fees which you could avoid^disclaimer, and if you don’t maintain a healthy repayment history, your credit rating could be affected – which in turn could affect your chances of getting things like home loans down the track.

If you’re worried about your credit card debt and your ability to make repayments, you should contact your credit card provider. They may be able to assist and may have tools and resources to help relieve any financial stress.

If you're an ANZ customer having difficulty making credit card repayments, please contact us on 1800 252 845.