One in two Australians are struggling with credit card debt.
Findings from ME’s latest Household Financial Comfort report show a top financial goal among the nation’s households is to pay off debt as fast as possible, for fear of being stuck in a ‘credit card roundabout’.
Around 21% of Australians want to pay off their debts as fast as they can and 16% want to get their debts under control. However, only 5% are looking to change their credit card arrangements to get a better deal or pay less interest.
Real problems start to occur when credit cards become the mainstay of household finances. In particular, snowballing interest charges can make it increasingly difficult to clear the slate.
Urgent action is essential
The critical thing is for anyone struggling with card debt to take action now.
It pays to look closely at the fees and charges on your card. Expensive annual fees and hidden costs like a higher rate or fees associated for cash advances are easily overlooked, yet these all add to card costs. With a range of credit cards available that charge zero annual fees coupled with a single low rate, this is an opportunity to reduce your costs.
Swing the pendulum in your favour
Credit cards are a great cash management tool, but ideally you should be paying them off each month. Ultimately, getting out and staying out of trouble with credit cards calls for a rethink of household money management.
A sensible starting point is drawing up a budget. It’s a tremendously useful tool to regain control of money matters, yet around 57% of Australians don’t consistently set a budget, and 40% fail to stick to the budget they have.
Part of the problem is that we tend to use ‘guesstimates’ for budget figures. The key to making a budget work is to track household expenses so that the numbers are realistic, then commit to staying within set spending limits.
For some of us the financial discipline of budgeting doesn’t come naturally. Setting up good processes can be helpful here. Arranging automatic transfers, for example, is a foolproof way to ensure you're consistently setting some money aside for saving. With a pool of cash to fall back on, chances are you won’t need to resort to a credit card when bills arrive, and the financial pendulum can start to swing in your favour.
This information is about products and services available to you as a member of Tasplan Super. Tasplan Super and ME are not agents or representatives of one another. Tasplan Super does not accept responsibility or liability for any loss or damage caused by the products or services provided by ME. Tasplan Super does not receive any commissions as a result of members using ME products and services.
The trustee of Tasplan Super (ABN 14 602 032 302) is Tasplan Pty Ltd (ABN 13 009 563 062). AFSL 235391.