5 credit card detox tips to do

Published on November 30th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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You finally got around to checking your credit report and it’s not looking good. If your credit report feels like it goes through near-death experiences every month with the multiple transactions and loan repayments that have sucked it dry, or is currently hanging on a drip as you pray that it sees you through till your next salary payment then it’s time for a credit card detox. These five tips will help keep your credit score up and out of the bad credit mark. If you already have a bad credit mark, it’s ok. You can still improve your credit report with these tips.

Know what goes into your credit score

Knowledge is certainly power, and by understanding what makes up your credit score the easier it will become to maintain a good one. What makes up your credit score are:

  • Payment history
  • Mix of credit
  • Level of debt
  • Credit age
  • Any recent credit you have taken out

Kick procrastination to the curb

You probably heard this tip so many times, but there is a reason why. Changing your behaviour in making late payments, even if its 24hrs late can put a dent in your credit report and stave off potential lenders. Banks such as the NAB charge late payments fees that range from $9 to $15, which can add up over time. One way you can solve this issue is by setting a reminder or using an automatic transaction that will pay off any monthly loan repayments. Even if it is towards paying off the minimum repayment and not the full repayment, make sure that you are on time.

We all fall off the bandwagon

Sometimes making repayments can be hard due to financial restraints or additional payments that popped up that you were not expecting. Australians are currently paying $33 billion of credit card debt. If you default on your credit card or miss a payment of more than $150 for more than 60 days, it can stay on your credit report for up to five years. If you fall off the bandwagon, get up as soon as you can. If you skipped a few repayments, make sure that you pay them off as soon as possible.

Draw up a budget and stick to it

Oh budget, thou art surely neglected! You will be amazed to find out how much money you spend if you do not budget. Constantly check your bank statement to see where are the holes that are causing you to leak financially, and use realistic ways to repair them.

Avoid applying too often

Try not to apply for new credit or loans in a short space of time as this will raise red flags when you approach lenders. It will make you appear to be irresponsible with your finances and therefore a huge risk. Try to spread the applications over six months or on a one-year period basis. This will have less of an impact on your credit file.

Review your credit card

Another option could be reviewing the type of credit card that you have. Perhaps when you took it out it had a low interest rate with flexible repayment plans, but over the years it has increased to something that you can no longer afford.

It is vital that you compare a credit card and check its terms and hidden fees to ensure that you don’t have any shockers in a few months to come. Choose a card that will work with your financial situation. If you are unsure you can always speak to an accredited card provider who will guide you in your selection.

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

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