Job loss and reduced hours due to COVID-19 has caused over 2 million Australians to exceed their credit card limit since the start of the pandemic. Most people who have exceeded their limit are likely to owe more than $10,000.00 on their credit card.
Australians are relying on credit cards to pay for essentials such as rent and food.
Although the Reserve Bank of Australia’s interest rates are at a record low of 0.25%, the big banks are still charging double-digit interest rates on credit cards. These double-digit interest rates are on credit cards marketed as low interest rate products.
Below are some tips for dealing with credit card debt:
- Make more regular payments;
- Have a hard limit imposed so that you can’t exceed your limit;
- Look for credit cards that offer interest free periods, lower rates and lower fees or contact your current provider and request same;
- Consolidate debt;
- Create a monthly budget.
Another great option is changing to a credit card with fixed monthly payments, instead of interest charges and late fees. The National Australian Bank and The Commonwealth Bank have this month launched credit cards with this option.