Aussies sitting on $50 billion credit card debt

Credit card debt is a huge problem in Australia with the nation racking up a debt to the tune of $50 billion.

While Aussies have slowed their credit card usage, we aren’t out of the woods yet.

In the past 30 years, the national credit card debt has increased year on year, sometimes by up to 28%.

New research from the Reserve Bank shows the total credit card debt has been between $48 and $50 billion for the past two years.

These figures suggest people are only making minimum repayments on their credit card, rather than making an effort to pay down their debt.

“It’s great for Aussies to have moved away from relying so heavily on their credit cards, but the remaining debt can still cause a lot of problems,” Debt Rescue operations manager Rachael Witton said.

According to Ms Witton, sticking to the minimum repayment amounts set by banks could cost you thousands of dollars over a number of years.

“By making the minimum repayment (which is 2% on average) on a $2,500 debt, it will take about 20 years and three months to pay off,” she said.

“The total interest you would pay in that time is roughly $4391 (based on the average purchase rate of 17.21%) which could be better spent on the family home, a holiday, a car or a rainy day fund.”

Credit Card holders are encouraged to get a handle on their debt by prioritising their repayments.

“Credit card debt is easy to lose control of because the money is always available to you,” Ms Witton said.

“By sitting on the debt for so long, it’s easy to become complacent.”

Debt Rescue helps people take control of their debt every day and Ms Witton said the debt cycle can easily be broken with a few small changes in your spending behavior.

Start Budgeting

How do you know what you can afford without knowing how much your have to spend? Taking an inventory of your income and your expenses in a budget will help you understand where your money is going and the places you can cut back on.

For example, if you are buying your lunch at work every day you could be spending over $75 each week. Packing left overs and planned lunches at home could save you hundreds of dollars each month.

Consider Balance Transfer Offers

There is a lot of competition for consumers in the credit card market at the moment. One way to steal consumers from the opposition is for banks to offer great deals on balance transfers.  

Shop around for a balance transfer deal. The best ones out at the moment offer you an interest free period of 6 months. During this time you should knuckle down and pay off as much of your debt as possible. 

Then once the interest free period ends your debt should be manageable. Be wary of transfer fees, but these are usually a lot less than the interest you would be paying over the 6 month period.

Stop using your credit cards

Paying off a debt is hard enough without it continuously growing. The only way you can plan to pay down and keep on track is to stop using your card. 

Your budget will help you plan for your bills so you can ensure you have enough money to cover your big ticket bills, then any money left over can be used as you see fit. If you can’t afford it straight away, save up or ask if you can put it on lay-by.

Renegotiate Terms

With so much competition for consumers, a simple phone call might be all it takes to lower the interest rate on your credit card. Enquire with your bank if they would consider giving you a better offer.

Have a look around at the offers available through other credit card providers and ask them to match or beat a competitor’s deal.

Consider a debt relief plan

Debt can be tough to tackle on your own, fortunately there are experts out there who specialise in cutting down debt. If you want to get fit, you would visit a personal trainer, if you want to get out of debt, talk to an expert. 

There are a number of debt relief options available to people at different stages of debt. From debt consolidation and informal debt agreements to formal debt agreements and bankruptcy, there is a positive solution available for you.

Bankruptcy is NOT the Easy Way Out

Imagine this - you are in debt. You owe a lot of money to many different banks and there is no way you can even start to pay it back. These banks are calling you every day and night to start to recoup some money. You can't afford to eat, buy clothes or petrol. The stress caused by your situation makes you act strange and your friends and family start drifting away from you. Then you hear about a thing called Bankruptcy which will make all your problems go away and you won't have to repay a cent.

Looking at it through a debtors eyes, it's easy to see why Bankruptcy is hailed as the easy way out. You don't have to pay for your mistakes, you aren't help accountable and your debt will just disappear, no questions asked.... if only it worked that way.

Bankruptcy is a huge commitment with several rules, restrictions and regulations. It is designed to help you learn from your mistakes, hold yourself accountable and repay whatever you can to your creditors.

Once you declare bankruptcy, a trustee will be assigned to your case. Anything of value outside of the set thresholds will be handed over to your trustee to sell. All the money from the sale of your assets will be distributed to your creditors.

The assets taken could include your home, car, tools, watercraft and large windfalls such as lotto wins, inheritances and your tax return.

Bankruptcy has thresholds placed on things like vehicle, tools of trade and your income anything worth more than the threshold will be given to your creditors.

A bankrupt must also adhere to strict rules, including no overseas travel, and you can not borrow money for the duration of your bankruptcy.

Bankruptcy can last from 3 to 8 years and will appear on your credit rating for 8 years. You will also be listed on the National Personal Insolvency Index for life.

There is nothing easy about Bankruptcy, although it does have it's place in Australia. For people who have completely exhausted all their options, bankruptcy can create a solid foundation from which to rebuild their finances.

For people who have only just fallen into debt, there are a number of other debt relief options available such as debt consolidation and debt agreements.

You can even apply for an informal debt agreement which wouldn't impact on your credit rating at all.

For more information on debt relief options click here.

How you know when you are in debt...

...and how to get out of it.

Everyone has a bad week here and there. When you lose track of what you have spent your money on and all of a sudden, you find yourself short.

If you are on top of your finances, you would have an emergency fund to fall back on until you find your feet.

But sometimes those bad weeks just keep coming, there is no emergency fund to speak of and you fall deeper and deeper into debt.

It's times like this, you could use a little help.

The best way to avoid falling into debt, is to identify the tell-tale signs of an impending insolvency.

1. You never seem to have enough money.

When you go to pay regular bills or purchase everday expenses, you never seem to have enough money available.

This is when you turn to things like credit cards and personal loans, which only makes your debt worse.

How to avoid it: Draw up a budget and monitor where your money is going.

Be sure you always have enough money put aside for your bills by cutting back on unnesesary purchases, like expensive takeaway or a trip to the cinemas.

2. You have several credit cards and personal loans in your name.

Borrowing money from the bank is easy and takes the pressure off your financial situation...for the time being.

But several credit cards and loans can get out of control and you are losing a lot of money paying interest and fees on each seperate account.

How to avoid it: To get all your loans down to a level you can cope with, you should consider consolidating your debts.

This will roll your repayments into a single regular repayment and leave you with only one set of interest. The catch with this is - you need to STOP using your credit cards.

3. You are more than a month behind on your loan repayments.

When it all becomes too much, it is sometimes easier to just ignore your debt in the hope it will go away.

Throwing your bills in the bin, ignoring your statements and wreckless spending will only add to your debt and make the situation worse.

How to avoid it: If you are weeks behind on your payments and you don't see a way of ever catching up, you can propose a Debt Agreement.

A Debt Agreement is negotiated by professionals to propose a new repyament schedule better suited to your situation. For more information on a Debt Agreement click here.

If you are having a problem with your debt, don't let it get out of control, no matter what stage you are in, there is always something you can do to get it under control.

For more help with debt visit www.debtrescue.com.au

Free Financial Assistance in Australia

One of life's most stressful experiences is having a bill and not being able to pay it.

Almost every Australian has experienced this frightful situation once in their lives, whether they were uni students learning to juggle their money, recently separated parents adjusting to the new income levels or someone who has lost their job or been injured and doesn't have any income at all.

If you have ever been in a situation where you can't pay a bill, you will know the stress, panic and anxiety involved.

You will also know how isolating it feels when you have nowhere to turn for help.

While countries across the globe are experiencing economic disasters, Australia is slowly and cautiously feeling its way through these uncertain times.

The government of each State and Territory in Australia has introduced benefits, schemes, discounts and assistance to ensure Aussies who are struggling with their bills are given a fair go.

While the assistance offered in each State and Territory varies, residents can expect to find financial help with paying utility bills, rent, mortgage, medical costs and everyday essential purchases. You can also find free financial counselling to develop a plan to get your money back on track.

For a full list of free financial services available in each State and Territory, follow the links below.

Free Financial Assistance

Queensland | New South Wales | Victoria | Australian Capital Territory | Norhtern Territory |Western Australia | South Australia | Tasmania

National Debt Relief - Australia

Debt isn't something you can easily ignore.

Even if all the late bills and overdue notices are thrown straight in the bin, the stress, anxiety, panic and despair of what will happen next will eventually take it's toll.

Debt stress can impact on your life, your relationships, your job, your family and even your health.

By leaving debt out of sight and out of mind you are fuelling the fire that could lead you to bankruptcy.

Before you debt gets out of hand your should turn to professionals for relief.

If you want to get fit turn to a personal trainer, if you want to get healthy go to a doctor and if you need to get out of debt, turn to Debt Rescue.

Debt Rescue is one of the leading debt relief service providers in Australia.

At Debt Rescue, the focus is on you. The professional case managers will take a personal interest in your situation and walk you through the options to get you out of debt.

Because no two people are the same, there are no one size fits all solutions to debt. Debt Rescue offers a range of debt relief strategies to help people get out of debt and stay there without seriously impacting their lifestyle.

So whether you have only just begun to feel the sting of debt or if you are staring bankruptcy in the face, Debt Rescue has a positive solution for you.

The debt relief services on offer include budgeting, debt consolidation, refinancing, Debtstroyer Debt Agreements, Formal Debt Agreements and can even assist with bankruptcy.

No matter where you live in Australia, Debt Rescue can help you.

To talk to and Aussie who Cares call 1800 00 3328 or visit www.debtrescue.com.au

Debt Relief Queensland | Debt Relief New South Wales | Debt Relief Australian Capital Territory | Debt Relief Victoria | Debt Relief Tasmania | Debt Relief South Australia | Debt Relief Western Australia | Debt Relief Northern Territory