Handling Credit Card Debt And Escaping Increasing Interest Rates
Since the start of the COVID-19 pandemic, interest rates across a variety of expenses such as home loans and personal loans have reached record lows however there is a sector that has seen practically no change at all: credit cards. Credit card interest rates have maintained high levels over the past two years with the Reserve Bank of Australia reporting an average rate of just under 20% per annum.
Despite consistently high rates of interest, Australians have significantly reduced the amount of debt owed with billions having been paid off. This can be attributed to a variety of factors such as spending less in general throughout the lockdown periods and the population becoming more money conscious during the recent events.
If you are wanting to tackle your credit card debts and are suffering under these high interest rates sometimes the hardest part is getting started and understanding what to prioritise. Learning about all of your options when paying back your debts is essential.
Pay Off Your Lowest Debts First
When you have multiple credit card debts, it can be difficult to know which one to deal with first. For higher debts, a long-term plan is essential to tackling them. Beginning with smaller debts that are easier to overcome in a shorter amount of time will help you to keep motivated through your journey to economic stability.
Once you can tick off one of those credit card debts, the overall pressure will reduce significantly. Goal setting, staying disciplined with payments and creating a solid plan will equip you with the tools you need to squash your debt and start saving for your future. Once you're on top of your finances, it will be time to explore credit card alternatives and make more informed choices about which cards you are signing up to. This is where a comparison service like Compare and Connect can come in handy.
Escaping High Interest Rates
Given that there has been little to no reduction in interest rates over the past few years, there is no use in waiting around in the hopes that the interest rates will drop. Keeping a credit card with a 20% per annum interest rate is largely unsustainable and inaction will only lead to further expenses down the line.
Making your high-rate credit card debt a priority is the key to financial stability. If you are using your credit card for day-to-day spending in the hopes of taking advantage of benefits such as travel points and other bonuses, consider whether the risk is worth it. You may be better suited to a credit card that has a lower interest rate in the event that you aren't able to pay off your debts each month. After all, anything can happen!
Paying off the remaining debt and cancelling your high interest credit card is the goal here. Once you are no longer locked into a high interest rate, Compared and Connect can help you to find a new credit card that is suitable for your needs but without the burden of excessive interest