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YOU’LL NEED A WEDGE TO HANG THAT DOOR
Watch 6:32

YOU’LL NEED A WEDGE TO HANG THAT DOOR

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Everything you need to know about money in your 40s

Everything you need to know about money in your 40s

Everything you need to know about money in your 30s

Everything you need to know about money in your 30s

Everything you need to know about money in your 20s

Everything you need to know about money in your 20s

The beginner’s guide to investing in 8 simple steps

The beginner’s guide to investing in 8 simple steps

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5 finance words you need to know

5 finance words you need to know

5 money-saving challenges you should try this year

5 money-saving challenges you should try this year

5 easy ways you can be better with money

5 easy ways you can be better with money

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Superannuation advice for every stage of life

Superannuation advice for every stage of life

Finance tips for young people

Finance tips for young people

How to reduce your expenses without sacrificing your lifestyle

How to reduce your expenses without sacrificing your lifestyle

4 signs you’re suffering from financial anxiety

4 signs you’re suffering from financial anxiety

Everything you need to know about money in your 50s

Everything you need to know about money in your 50s

Home loan application advice for first-time buyers

Home loan application advice for first-time buyers

5 easy finance tips for people over 50

5 easy finance tips for people over 50

  1. Home
  2. Better Life

One in six Aussies fall into this debt trap

Are you one of them? - by Laura Barry
  • 05 Jul 2018
One in six Aussies fall into this debt trap

According to the review into credit card lending by the Australian Securities and Investments Commission (ASIC), one in six Australians are falling victim to the ‘debt-trap’ that is credit cards, and the banks are reaping the benefits.

Around 1.9 per cent of Australians are drowning in credit card debt, and a mind-blowing $45 billion dollars of debt is owed nation-wide, with interest being charged on $31.7 billion of it.

ASIC also found that consumers could have saved up to $621 million dollars in interest between 2016 and 2017 if only they weren’t carrying balances over time on a high-interest card. The report found that while some Australians were able to reduce their debt during the promotional period of a balance transfer onto a new card, more than 30 per cent of card holders actually increased their debt by ten per cent or more, not to mention the $1.5 billion dollars credit card holders were collectively charged for annual fees, late payment fees and other associated costs for using their credit cards.

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ASIC is now pushing for tighter regulations to ensure customers are only approved for credit card limits they could repay within three years.

ASIC has identified persistent debt, low repayments and poorly suited products for customers as the key issues lenders aren’t addressing, which means lenders are failing to act in the best interests of the consumer, here’s what you can do about it.

How to pay off credit card debt 

Credit cards American express visa mastercard
Getty
  • Consider a 0% balance transfer offer to minimise the interest payments to paydown your credit card debt faster. But beware – This strategy only works if you have a solid plan in place to pay off the entire balance within the promotional period, and you don’t use this card for any purchases. Otherwise you fall into the trap of paying a high interest rate after the promotional period.
  • Arrange to have your credit card repayments direct-debited from your account on pay day and pay more than the minimum repayments.
  • Always make the minimum monthly repayments on your cards, but focus on paying as large an amount you can afford on the debt with the highest interest rate first. Otherwise, start with the smallest amount owing and work your way up.
  • Close each credit card account as you pay it off.
  • Lower your credit card limit
  • If you’re still struggling contact the credit provider and ask for the hardship department and organise a repayment plan.

You might also like:

Take control of your finances in three simple steps 

The changes kicking in from July 1

End of financial year 

  • News
  • Finance
  • Better Life
Laura Barry
Laura Barry
Laura Barry is a writer, bookworm and interior design enthusiast with a love for reporting on all things homes, travel and lifestyle. When not tapping away at her keyboard, Laura can be found making endless cups of tea or perusing the shelves of Sydney’s many bookstores.

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YOU’LL NEED A WEDGE TO HANG THAT DOOR
Watch 6:32

YOU’LL NEED A WEDGE TO HANG THAT DOOR

{headline}

{headline}

Everything you need to know about money in your 40s

Everything you need to know about money in your 40s

Everything you need to know about money in your 30s

Everything you need to know about money in your 30s

Everything you need to know about money in your 20s

Everything you need to know about money in your 20s

The beginner’s guide to investing in 8 simple steps

The beginner’s guide to investing in 8 simple steps

{headline}

{headline}

5 finance words you need to know

5 finance words you need to know

5 money-saving challenges you should try this year

5 money-saving challenges you should try this year

5 easy ways you can be better with money

5 easy ways you can be better with money

{headline}

{headline}

Superannuation advice for every stage of life

Superannuation advice for every stage of life

Finance tips for young people

Finance tips for young people

How to reduce your expenses without sacrificing your lifestyle

How to reduce your expenses without sacrificing your lifestyle

4 signs you’re suffering from financial anxiety

4 signs you’re suffering from financial anxiety

Everything you need to know about money in your 50s

Everything you need to know about money in your 50s

Home loan application advice for first-time buyers

Home loan application advice for first-time buyers

5 easy finance tips for people over 50

5 easy finance tips for people over 50

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