Credit card help: Tips to take control of your credit card

Information verified correct on September 30th, 2016

8 easy tips to consolidate debt and take control of your credit card finances

Big ticket purchases, problems with cash flow, impulse purchases: there are many reasons why credit card debt can get out of control. If you’re looking for credit card help, use these tips so you can clear your mind of nagging credit card debt.

8 simple ways to manage your credit card and debts

1. Pay your balance back in full by the statement due date

Credit cards work as a short term cashflow solution. Things can easily get out of control if you let your credit card debt rollover from month to month. You won’t get interest-free days and you’re will interest compound, meaning you’ll be charged interest on interest. It’s important to pay your balance off in full by your credit card statement due date to avoid this situation. Most credit cards also offer interest free days if you regularly pay your balance in full each month, allowing you to avoid interest charges on eligible transactions made during each statement period.

2. Cut up your credit card

If you want to concentrate on paying down your credit card debt(s), cutting up your credit card(s) is a sure way to make sure you stop spending. Remember that if you cut up your credit card, you can’t use it for emergencies, so be sure you have emergency funds to cover the unexpected. If you need to use your credit card again, you’ll also need to order a replacement card and pay the replacement card fee.

3. Avoid using your credit card for cash advances

A credit card should not be used for cash withdrawals or other cash advance transactions. Cash advance transactions are ineligible for interest free days and incur high interest charges of about 20% p.a., depending on the card. Some low rate and low fee credit cards (especially credit cards offered by credit unions and mutual banks) may apply the same rate of interest for purchases and cash advances, but you’ll still pay interest from the time the transaction is made.

Credit cards with low cash advance rates of interest

balance transfer4. Do a balance transfer if you can

Get a balance transfer to a new credit card and you could save money on your interest repayments with  a low or 0% promotional rate of interest for a limited period of time. When used effectively, this process can save you hundreds of dollars.

To give you some perspective, RBA data puts the average credit card debt at $3,192. If you carry out a balance transfer to a credit card with a promotional offer of 0% for 12 months, you could save up to $626 in interest repayments. There are also credit cards that offer interest free balance transfer terms for up to 20 months.

At the end of the balance transfer introductory period, anything you haven’t paid back will be charged at either the purchase or cash advance rate of interest for the credit card. Another thing to be aware of is that if you’re carrying a balance transfer balance from month to month and you make purchases, interest free days will not apply and you’ll incur charges right away. Consider your circumstances and compare a range of balance transfer credit cards so you can decide if this option will help you pay off your credit card debt.

5. Financial hardship assistance from financial institutions

Financial institutions provide financial hardship assistance and services, including extra insurance you can purchase for a premium. For example, Commonwealth Bank offer Credit Card Plus insurance which pays a benefit in the event you become unemployed, disabled or terminally ill. For this cover, Commonwealth Bank charge a premium of 55 cents for every $100 you owe on your credit card.

Financial hardship programs are common and your bank or financial institution will be able to assist you help make your repayments if you lose your job, become sick, end a relationship or experience in drop in income. Contact a customer service representative from your financial institution to get in touch with the financial hardship team. For example, for short term financial hardship, contact the Commonwealth Bank Collections and Credit Solutions Team. For long term financial hardship, contact the Commonwealth Bank Customer Assist Team.

6. Financial hardship assistance from the government

The government may also be able to provide financial assistance to help you take control of your credit card debt. Services such as crisis payments are available if you’re currently receiving an income support payment or experiencing severe financial hardship.

    • Crisis Payments. If you’re the victim of a circumstance such as domestic violence or a natural disaster, you can apply for a crisis payment from the Australian government. Crisis payments are assessed on a case-by-case basis and can be up to the value of one week’s income support. You may be able to claim crisis payments up to four times a year.
    • Government community support. The government provides free support services you can use if you’re suffering financial hardship. The Department of Human Services (DHS) website has a convenient tool you can use to find the relevant support service in your state. For example, in New South Wales (NSW) there’s free financial counselling as well as education resources via the MoneySmart website.

7. Early release of superannuation

In some cases, you can get your superannuation released early on compassionate grounds. For example, if you’re suffering financial hardship, you become disabled or incapacitated or diagnosed with a terminal illness. Passionate grounds include the following circumstances:

    • Paying for medical or palliative care for you or your dependents
    • To prevent your home from being sold
    • To modify a motor vehicle or your home to accommodate needs of the disabled
    • To pay for funeral expenses

8. Managing multiple credit cards

If you have a couple of credit cards you’re looking to pay off, it can be confusing to know which credit card to pay off first and which to pay second and so on. It’s wise to pay the credit card debt with the highest interest charges first, but it’s not always that simple.

Generally an outstanding credit card balance is made up of a couple of different types of transactions. For example, purchase balances, cash advance balances and a balance transfer balance all accrue interest at different rates.

The order of repayments

Financial institutions will apply your credit card repayments to the most expensive balance first and the least expensive balance last. For example, if you have a credit card with an active 0% balance transfer promotion and a purchase rate of 17%, then you make a purchase, the purchase balance will be paid first when you make a repayment.

Which credit card should Jane pay first?

Jane has two credit cards. She owes $2,000 on one card and $1,000 on the other. The balances of both cards accrue interest at 15% p.a. She makes minimum repayments on both cards, totalling $80 per month. Jane transfers the $2,000 debt to a balance transfer card and pays 0% for 12 months. Her balance transfer credit card also has no annual fee.

Over 12 months she saves $272.19 on interest repayments or about $22 a month. She is only making the minimum repayment on the smaller debt, so she uses the extra money to increase her payments on other card. The extra $22 payment to the $1,000 credit card balance will save Jane $120 in interest and it will take her 12 months less to pay off her card.

Credit card repayment calculator

Credit card debt can easily get out of hand but there are many ways to deal with it, as this guide shows. If you’ve got any other ideas about how to take control of your credit card, let us know by leaving a comment below.

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Credit Cards Comparison

Rates last updated September 30th, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
Enjoy a 0% p.a. balance transfer offer for 18 months and also earn 2 bonus Velocity Points in the first 3 months on everyday spend.
20.74% p.a. 0% p.a. for 18 months $64 p.a. annual fee for the first year ($129 p.a. thereafter) Go to site More info
ME Bank frank Credit Card
Enjoy a low and consistent interest rate on purchases and cash advances, combined with no annual fee.
11.99% p.a. $0 p.a. Go to site More info
St.George Vertigo Visa
Introductory offer of 0% p.a. for 18 months on balance transfers and 1% p.a. for 12 months on purchases, plus a low annual fee.
1% p.a. for 12 months (reverts to 13.24% p.a.) 0% p.a. for 18 months $55 p.a. Go to site More info
HSBC Platinum Credit Card
Receive a full annual fee refund and save $149 if you meet the $6,000 spend requirement. Enjoy a balance transfer offer and platinum card benefits such as complimentary insurances and concierge services.
19.99% p.a. 0% p.a. for 15 months $149 p.a. Go to site More info

* The credit card offers compared on this page are chosen from a range of credit cards CreditCardFinder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing cards.

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