Credit cards - credit card debt & management

Credit cards are an easy way to pay for things with a quick swipe or tap, but they can be expensive. High interest rates apply if we don’t pay off the card in full each month – and the longer that debt goes unpaid, the more its costs can drag us down. Here’s how to keep those cards under control, with a few tips for managing your card.

Find the best interest rate

Credit card interest rates can range from 12% to more than 20%. Cards with low interest rates usually charge higher annual fees.

If you don’t usually pay off your card every month, it’s worth choosing the card with the lowest interest rate.


Can’t seem to get that balance down to zero? It can be worth looking into balance transfers. These are special offers to transfer a balance from a current card to a new one with a different lender – but at a much lower interest rate.

When taking up a balance transfer offer to pay off credit card debt, it’s best to cut up and cancel the old card to avoid running it up again. Also, check the details of the offer, as any new purchases might be at a different interest rate.

Guide to managing debt

Check the fees and interest-free days

The more often you pay your credit card balance in full every month, the more you avoid interest charges.


Most credit cards offer interest-free days and charge an annual fee. Fees can be up to several hundred dollars a year and the number of interest-free days can range from 0 to 180.

Sometimes it may seem like you’re paying more than you should, in which case, call the bank and ask for a better deal. If they can’t come up with a better offer, consider changing cards.

For more information about current interest rates, interest-free days and fees visit the website.


A helpful option: debit cards

Debit cards are an alternative to credit cards with much of the same convenience. However, with a debit card, instead of borrowing money and potentially being charged fees and interest, we spend our own money that is preloaded onto the card. These are much like Eftpos, but with additional credit card features, like being able to be used for online purchases.

Debit cards are helpful for two reasons: we don’t risk spending more than we have, and we avoid the interest and fees that come with credit cards.

But buying on cards leads to us spending more in general – up to 30% more than using cash. Some people like to try just paying with cash for a while as we’re often more reluctant to hand over a big stack of notes for purchases. It’s so easy to swipe a credit card and not feel the impact of the money going out.

Top tips for managing credit cards

  1. Shop around for the best deal: credit cards come with a range of interest rates, fees, and rewards programmes.
  2. Know the interest rate: many credit cards charge around 20% interest.
  3. Review the card limit: this should be based on what you can afford (not how much you might spend!). There’s no shame in asking for a lower limit.
  4. Pay it off each month: you can only take advantage of interest-free days if you pay the balance in full at the end of each month. If that’s not manageable, try to pay more than the minimum repayment to save on interest costs.
  5. Cash advances cost more: banks charge high fees for withdrawing cash on a credit card. Any cash withdrawn also attracts a high interest rate from day one.
  6. Be wary of accepting a higher limit or another card: if you let the bank raise your credit limit, or give you another credit card, you might end up paying lots of interest. Plus credit cards usually have an annual fee, so more cards mean more fees.
  7. Leave the card at home: if you find that you can’t help spending more than you can afford, it’s best to leave the card at home. Take time to weigh up whether a purchase is essential or just nice to have.
  8. When in trouble, talk to the bank: credit card getting out of hand? Ask the bank about what options there might be, such as taking out a lower-interest loan to pay off credit card debt.


Use our debt calculator to work out how quickly you could clear your credit card balance and get out of debt.





Don’t know where to start?

Check out our 6 steps Get Sorted program to get you on track.

Head to the 6 steps