A month on from Christmas and an estimated three million Australians are facing mounting credit card debt after splurging in December.
According to comparison website finder.com.au, those affected are set to pay a combined $397 million in interest payments in the near future.
It comes as a new forecast of Reserve Bank of Australia (RBA) data analysed by finder.com.au reveals the nation likely borrowed $28 billion on credit cards in December 2016, while it was predicted $9.8 billion was spent on gifts alone.
The average amount owed after the holiday season is thought to be $1,666 per credit card across Australia.
Bessie Hassan, spokesperson at finder.com.au, says January can be a difficult month for organising personal finances as Australians work to recover from a debt hangover.
“It’s easy to fall behind when the bills for festive spending flow over into the new calendar year.
“Many of us fall into the ‘spend now, worry later’ mentality, but this can be risky if you’re not conscious of how much interest you’re being charged, or if you’re not in a sound position to repay the debt,” she says.
With the prospect of higher interest rates on the horizon, Australians are being urged to consider a zero interest rate balance transfer to reduce interest charges.
But be warned, these zero interest periods are for a limited time only, and rates will increase significantly in time.
“From a financial perspective, a zero per cent balance transfer can alleviate the burden of paying interest, which enables you to repay your balance more efficiently.
“Before you conduct a balance transfer, estimate the amount you’ll need to repay each month to ensure your balance hits zero once the interest-free term expires.
“If you don’t think you’ll be able to repay the debt during the promotional period, consider a card with a longer interest-free timeframe, such as one that provides 18 months or even 24 months without interest,” she says.
Currently, there are currently 150 credit cards offering zero per cent balance transfer deals for up to 24 months, according to the finder.com.au database.
Here are some of them on finder.com.au
|Card||Balance Transfer offer||Purchase rate||Annual fee|
|NAB Premium Card||0% for 24 months||19.74%||$90|
|Citi Rewards Platinum Credit Card||0% for 24 months||20.99%||$49 p.a. annual fee for the first year ($149 p.a. thereafter)|
|Bankwest Breeze Credit Card||0% for 21 months||12.99%||$59|