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Manage debt

Debt doesn’t have to be a dirty word. In fact, it can be good, bad or just downright useful. In this step, we look into types of debt and ways to get on top of them.



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Types of debt

Debt payment tips

Managing debt

Your credit score


1. Types of debt

Get down and dirty with your debt

You may have heard some debt described as good – they have the potential to increase your net worth or generate income. These may include student loans, a mortgage on your home or the costs of running your own business. But some debts are often called “bad debts”, such as spending above your means, or borrowing money to buy non-essential items.

It’s good to know which category your debt falls under. Make a list of all your debts including bank or student loans, store credit cards and buy-now-pay-later accounts. Figure out which category they fall into, so you can start making a plan to pay them off.

2. Managing debt

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Prioritise your debts

By outlining all of your debts you’ll have a much better idea of your financial situation. This is where a list can come in handy; it’ll clearly detail each of your debts so you can easily keep track of them. Plus, by putting things on paper rather than trying to manage them in your head, things can seem more straightforward. List your debts in order of importance, starting with your most expensive or pressing debt. Then move down the list to other items such as your bills, mortgage, car repayments, and insurance. Make sure to include the total amount for each debt, the name of the creditor, and any interest rates attached to the debt.


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Different ways to approach repayments

Depending on the type of debts you’ve got, there are different ways you can start paying them off. For example, student loans could be tackled with automatic salary sacrifice payments, while transferring your savings to an offset account may help reduce the amount of interest you’re paying on your mortgage. However, if you are on a Government funded higher education scheme, please consider your repayment options specific to your loan. Consider making additional payments to pay down your loan(s). The important thing is to understand which options are right for you and the types of debt you have.



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Could consolidating debt work for you?

If you have lots of small debts, like store credit cards or personal loans, you may be able to consolidate your debt under one umbrella to reduce the amount of interest you’re paying across the board. If this is something you’re considering, you can use the ANZ personal loan repayment calculator to get an estimate to help you see if the payments will work for your budget.

Try our repayment calculator

3. Debt payment tips

How to get your debt working for you

Whether it’s credit cards or a home loan, there are tricks you can use to reduce interest and pay off your debt faster. With credit cards you should aim to pay off your balance each month rather than letting it pile up – or at least aim to pay it off within the interest free period so your debt isn’t expanding. When getting a personal loan shop around to find the best interest rate or speak to an expert to help you decide if a fixed or a variable rate will be best for you.

Making mortgage repayments more frequently (such as fortnightly instead of monthly) can reduce the amount of interest you pay over the life of your loan. Whichever types of debt you’re wanting to wrangle, speak to your financial institution to find ways to make it work for you and get on top of your debt.

Get creducated

When it comes to debt, credit cards come with some big responsibilities. To get stuck into all the details, check out ANZ Creducation, an online educational series looking at personal credit card interest, payments, balance transfers and more, starring Lola Berry, Adam Dovile, Poh Ling Yeow, Libby Trickett and Neale Whitaker.

Who's the boss of your debt? You are.

Clarifying your debt is the first step to getting it under control. Next it’s time to understand how those debts have impacted your credit score – and how you could start improving it.

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Pro tip

65 per cent of Australians have never checked their credit score. Get ahead of the pack and see where you stand.

4. Your credit score

What is a credit score?

Your credit score is a number based on your credit history that lenders and banks take into account when determining whether or not to lend you money. So it’s a pretty powerful number. Since 2018, Australia has implemented comprehensive credit reporting, which is designed to provide lenders with a more complete picture of your history. Check with your financial institution to see what help you can get.



How is your credit score calculated?

The ASIC MoneySmart website says your credit score takes into account the following:

  • Your age and where you live
  • Any loans you have
  • The number of applications/ enquiries you've made
  • The type of credit accounts you’ve held
  • Your usual repayment amount/s
  • Whether you make your repayments on time
  • If you have previously had a bankruptcy or personal insolvency agreement



How to improve your credit score

The great news is that your credit score is dynamic, so it can change depending on things you do. You can actively improve your credit score by paying all your bills or loan repayments on time. The ASIC MoneySmart website offers a few options for checking your credit score. Find out your score now, and then come back here to give your debt management a boost.

Check your credit score

Well done, you're on your way to being a debt master.

You’ve just learned about managing your debt, now it's time to forge ahead with the rest of the program.

What's next?

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Set a savings goal

Visualise where you’re going with
a savings goal.

Start saving

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Organise your accounts

Set, select and relax.
Start organising


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Invest in your future

Smart ways to grow your wealth.
Start now

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Know where you're at

Calculate your Financial Wellbeing Score.
Get my score

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Plan your spend

Yes, it’s a budget. But not as you know it.
Start planning

The information set out above is general in nature and has been prepared without taking into account your 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.

ANZ does not use the information you provide for the purpose of assessing any application.