Home' Navy News : April 26th 2012 Contents 24
April 26, 2012
AUSTRALIANS owe more
than $36 billion on credit
cards where interest is being
charged. That's an average of
$4700 debt per card holder. Are you one
of these people?
Don't let the compound interest
inflate your debt over time. If your
credit card debt is slowly building up,
front it head on.
The message is clear: make paying
off your credit card debt a top priority.
Pay off as much as you can afford, as
quickly as possible.
Let's say you've got a credit card
debt of $4700. If you only make the
minimum repayments, it will take 49
years to pay off your card and that
assumes you don't use it any more.
The interest charged over that time
would grow to about $14,600. This
assumes 18.5 per cent interest and a
minimum repayment of 2 per cent.
The good news is that with a lit-
tle discipline you can reduce the debt
dramatically. If you pay off $250 each
month instead of the minimum repay-
Email ASIC at ADFcolumn@asic.gov.au with topics that interest you
Reducing credit card debt
ment, you'll pay off your debt in two
years and save about $13,700 in inter-
est.By reducing your credit card debt
to zero, you'll save around $800 a year
in unnecessary interest charges. That's
money you could spend on things you
I encourage everyone with credit
card debt to go to the MoneySmart
credit card calculator and see how
much money you can save. Find it at
More than one card?
If you've got multiple credit cards,
once you pay them off only keep the
cheapest one -- the one with the lowest
interest rate or fees.
Be sure to cancel your credit cards
properly by informing your bank,
because if you just cut them up and
don't tell your bank, you may still
have to pay fees.
Once you've paid off your credit
card, consider only using it for emer-
gencies. Also think about using a debit
card instead of a credit card for online
purchases so that you're buying things
with money you already have.
TIPS TO SAVE MONEY
If you are serious about tackling your credit card
debt, here are the four things you need to do:
Pay more than the minimum repayment -- even an
extra $50 a month will make a big difference.
Stop adding more debt to your credit card. That
means you stop using the card as much as pos-
Set up a direct debit to pay a fixed amount off
your credit card balance each payday. That way
you won't even notice the money going out.
If you have more than one card, pay off the card
with the highest interest rate first.
Photo: LAC Bill Solomou
Tackle your credit card debt, advises Australian
Securities and investments Commission chairman
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