5 things you can do to keep credit card debt on a leash

Last updated on November 25th, 2021
  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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Last year might have seen you land in credit card debt, but there’s no point in beating yourself up about it. This is a new year, and you can regain control of your credit by adopting healthier spending habits that will help you have control over your debt. What it will take is a change in terms of your mindset and you are already on the right track. These are five things that you can regain control over your credit this year.

Don’t let history repeat itself

The best way to see where you keep slipping up is to look through your credit report and your bank statement. Since swiping comes so easily than using hard cash it is easy for your money to disappear and for you to push your credit into an overdraft that can accumulate debt.

By evaluating your credit history and bank statement you will get to see the holes that cause you to overspend. Once this is dealt with you can proceed to find ways to fix it. You can also get help from a financial advisor or a debt counsellor who will steer you in the right direction.

Know when to use your card

There are 16,719,143 credit cards in circulation in Australia and the number shows no sign of slowing down and there is a reason why. Credit cards are convenient and come with some nifty features too that benefit your shopping experience. This is clearly seen by data released by finder which shows credit card purchases, which sat at $115.22, to be higher than debit card purchases at $47.97.

However, convenience can turn into a stress ball if you don’t know when and how to use it. Swiping purely to attain the rewards a card holds may not be beneficial for you, especially if you have to adjust your budget to attain these awards.

If that’s the case, then switching to a card that matches your budget will be the best thing that you can do. Only use your card to make important major payments, instead of swiping out of convenience.

Try not to miss a payment

If there is one priority that should be kept at the top of your list in terms of your credit card it is not to miss a payment. It’s best to pay a bill on time and carry a balance than to skip the payment entirely. This can harm your credit report and raise red flags to future lenders you will be applying to, resulting in the rejection of your application. You can set up automatic payments to make sure that your credit card is paid on time.

Start working within your means

Lying to ourselves is a common thing, but knowing when you are pulling your own leg can save you from a lot of trouble down the road. This year aim to work within your means and what you need by using your credit card when it is necessary. Before you make a purchase on your card you will have to be honest with yourself by asking if you really need it, or would you rather save up and purchase it later?

Be aware of the tell-tale signs

The ones that show you that you are now headed in the wrong direction. Using the first point as a reference, you will be able to tell when credit card debt is looming. One of the common signs of getting into credit card debt is when you use it to pay for necessities such as:

  • Rent
  • Food
  • Clothing
  • Skipping payments on another card
  • Ignoring credit card statement’s you receive

Quickly take a step back and reassess where this is going to before you find yourself repeating the same mistake once more. Maybe you need to re-evaluate if the card you are currently holding is within your means, and if not, then you can shop and compare cards with better interest rates.

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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.

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