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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. Stop. Using. Your. Card.

You may want to put the plastic (safely) away and stop using it while you’re on a quest to pay off your credit card debt. If you keep spending – this could only serve to increase the amount of the repayments you’ll need to make, the length of time it could take to pay off the card and the amount of interest you might pay.

You could also think about decreasing your credit limit to help you avoid temptation.

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 debitsdisclaimer, 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 avoiddisclaimer, 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.

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Information in this article refers to personal credit cards, is general in nature only and does not take into account your personal objectives, financial situation or needs. 

By providing this information ANZ does not intend to provide any financial advice or other advice or recommendations. You should seek independent financial, legal, tax and other relevant advice having regard to your particular circumstances.

The information is current as at May 2020 and may be subject to change. ANZ recommends you review your personal credit card contract for information about the terms that apply to you.

ANZ interest rates and fees and terms and conditions are subject to change. Refer to the current credit card interest rates, fees and terms for further information and current interest rates, fees and terms. 

Applications for credit at ANZ are subject to ANZ’s credit approval criteria, terms, conditions and fees and charges apply. Australian Credit Licence Number 234527

Consider seeking independent legal, financial, taxation or other advice to check how this information relates to your unique circumstances.

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Direct debiting is not available on all accounts. If in doubt, please refer to your bank or financial institution. Terms and conditions may apply to direct debit arrangements, including that your nominated account has sufficient cleared funds. Temporary service disruptions may occur. Contact your credit card provider for further details. ANZ recommends you read the applicable Terms and Conditions and the ANZ Financial Services Guide before acquiring any ANZ product with a direct debit arrangement. 

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ANZ consumer credit card account holders can avoid Late Payment Fees by paying the Minimum Monthly Payment shown on their statement of account by the due date, as well as paying any overlimit amounts or overdue amounts. At ANZ, if a consumer credit card account has interest-free periods on purchases, the account holder can avoid paying interest on the purchases balance by always paying the full Closing Balance (or if applicable, the ‘Adjusted Closing Balance’) shown on each statement of account by the applicable due date. The Adjusted Closing Balance is calculated as the closing balance less the sum of any relevant Promotional Plan balances that relate to an Instalment Plan, a Buy Now Pay Later plan, or a Promotional Balance Transfer Plan. If the account holder doesn’t pay the full Closing Balance (or if applicable, your ‘Adjusted Closing Balance’) shown on a statement of account by the applicable due date, they will generally be charged interest on their purchases balance from the day after the Due Date shown on that statement. Not all transactions (e.g., cash advances) get the benefit of interest-free days. Refer to the applicable credit contract for details.

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