CREDIT CARD CATASTROPHE LOOMING

Each year as the days heat up and Christmas rolls around, Australians head to the shops in droves and run up a huge shopping bill on their credit cards. The transactions made on credit and charge cards in December each year account for almost 10% of the year's transactions and during last December alone we charged over $17,000,000 on our credit accounts.1

As the amount spent by Australians on credit and charge cards continues to rise, the outstanding balance on these cards has increased at an almost exponential rate. The amount owing on credit cards is nearly 12 times higher than it was 20 years ago. At June this year the debt of outstanding balances was close to $41 billion; equivalent to a debt of over $2,500 for each of the approximately 16 million Australians eligible to hold a credit card.1

The big stats keep rolling on. As a country we hold more than 13.5 million cards in our back pockets with an average limit of $8,000 and an average debt on each one of $3,000; sizeable dollars for relatively small country.1

Monthly Credit Card Transactions Outstanding Credit Card Balances

With the Silly Season again fast approaching, now is the time to set firm budgetary guidelines for Christmas spending to avoid the temptation to splurge and overspend, especially on your credit cards. Being firm with yourself now will save you the pain of trying to repay a balance that's more than you can afford which could see you still paying off this Christmas several months into the New Year. Don't wait until after Christmas to set New Year Resolutions, turn over a new financial leaf starting today.

RateCity Top Tips to Avoid the Christmas Credit Card Catastrophe
  • Make a list of each present you need to buy and set a dollar limit to the cost of these, this is also useful way to plan your shopping.
  • Don't see the limit on your credit card as the limit on your Christmas budget - it's not free money!
  • Resist the temptation to accept a limit increase on your credit card or apply for a second, third or fourth card; not only will this give you more opportunities to run into trouble but if you want to apply for a home loan, it's your total credit limit, not your outstanding balance that counts against you.
  • If you have an outstanding balance on your card, stop using it and only pay for things with the money you have. Set an amount you wish to pay off each week and slowly chip away at the debt.
  • If you already have more than one card, investigate the low rate balance transfers on offer but make sure you pay off any transferred balance before the usual higher interest rate kicks back in if you don't want to incur hefty interest charges.
  • Remember; Christmas is about the spirit of giving not the size of the present. The thought behind a simple heartfelt gift is worth more than that gold Rolex © !
How do I compare credit cards?

RateCity is the best website to shop around on for all credit cards, as well as most other financial products. At RateCity, you can use expert comparative data from CANSTAR CANNEX, Australia's leading financial research and ratings firm. CANSTAR CANNEX has analysed and evaluated hundreds of financial products to award five stars to only the very best. The CANSTAR CANNEX star ratings go much further than just looking at interest rates. They also take into account important features so you can be confident you are getting the best product.

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1 SOURCE: RBA Data