Maxed-out cards mean stressed-out mum
STAY-at-home mum Rebecca Allen says money is the “most stressful thing” in her life as she battles paying off three maxed out credit cards totalling $16,000.
The 32-year-old said costly events including her washing machine dying and expensive vet bills after her dog fell ill hit her hip pocket hard, forcing her to turn to plastic to make ends meet.
“We had a hiccup where my partner went to the bank and asked to put all the debt onto one card and he got talked into getting another credit card instead,” Ms Allen said.
“It had a $4000 limit and instead of getting rid of it, it got used and since then it’s been an uphill struggle. There’s always something or some excuse as to why we only pay the minimum off each month.”
Many Australians battle a credit card hangover in the new year after festive season spending.
The latest Reserve Bank of Australia data shows Australians owe $43.1 billion on personal credit cards and $27.2 billion is accruing interest.
Financial comparison website Mozo’s data shows there are plenty of balance-transfer cards – where you transfer card debt from one card to another and enjoy honeymoon interest-free periods – to help customers pay off debt faster.
They span up to 26 months but usually come with transfer fees, annual fees and hefty interest rates.
Mozo spokeswoman Kirsty Lamont said “many Australians will be starting 2020 with a serious debt hangover”.
“The best thing you can do is make a plan to pay off the debt as soon as possible,” she said.
Ms Allen’s three cards’ interest rates are up to 24 per cent and her minimum monthly repayments on the cards range between $41 and $163.
She signed up to the Wisr app, which rounds up her purchases in her everyday account and then the rounded up amount is used to help pay back her card debt each month.
Wisr chief executive officer Anthony Nantes said many Australians would be receiving large credit bills from the Christmas and new year period, adding extra pressure on budgets.
“There’s a lot of spending that goes on including entertainment, eating out, gifts, and Christmas parties and Ubers, which all add up,” he said.
Mr Nantes said to kick the debt, changing habits was the key to success.
“Automating debt reduction when you buy coffees, sandwiches or take an Uber can help you pay down some of your debt,” he said.
Other institutions, including ING, also have round-up tools that allow customers to round up spending on their card to the nearest $1 or $5 amount, then tip it into savings accounts, mortgages and other debt.