Feeling overwhelmed with your credit card debt?

If you are feeling like you just can’t get ahead of your credit card debt you are not alone. According to a recent report by Australian Securities and Investments Commission (ASIC), 18.5% of consumers are overwhelmed by their credit card debt with outstanding balances now totalling $45 billion (yes, BILLION!!).

In the aftermath of the silly season spending, perhaps now would be a good time to consider taking control of this debt by consolidating it into a personal loan.

On a $10K credit card at an interest rate of 20%, if you are only making the minimum repayments, it will take you just over 61 years to pay off the card. In that time you will pay just over $42,000 in interest. The minimum repayment would start at $204 per month and reduce as the debt reduces (assuming the card is not used for purchases anymore, which let’s face it, generally doesn’t happen).

If you consolidate this debt into a personal loan over 5 years at say 15% (although we do have rates as low as 9.99%), you will pay just over $4,200 in interest (that is 10 times less than the credit card!). The repayments would be $238 per month and the debt will reduce to $0. We would suggest perhaps keeping the original credit card but reducing the limit down to $1-2K just for emergency use (but don’t leave the card in your wallet, keep it at home).

The above calculations were completed on the ASIC Money Smart website. There are some very handy calculators on there so feel free to head over and put your own scenario through.

You will see bank’s advertising tempting 0% balance transfer offers but unless you are extremely disciplined and use the usually 12 month 0% period to knock down the debt, you will likely be in the same position you were to start with once the offer period is over (not to mention the annual fee or once off transfer fee they will have charged you). Or the other scenario we see all the time (if this is you, you are definitely not the only one) is people go through with the balance transfer but don’t close the original card. The original card becomes too tempting and before you know it that one has crept back up to the limit and at the same time the balance transfer offer period wasn’t used to pay down the new card so people can end up in a worse position.

We have some great bank and non bank lender options for personal loans. Often some will have ‘no application fee’ promotions so get in touch if you would like us to help you get rid of that credit card debt. Often we can have the whole process from application to settlement done in a couple of days. We also have low doc options for self employed people who for whatever reason can’t provide tax returns.