New Year, new you…right? Well, sometimes it’s hard to start the year fresh when you have to deal with your post-holiday debt hangover. If you’ve overindulged a little over the Christmas period, take control of your finances now so that your overspending doesn’t snowball into a debt crisis later.
The Credit Savvy team have compiled a list of 5 tips to help you pay off your Christmas debt:
Every debt clearing article out there will always tell you to create a budget and stick to it. It’s one of the fundamental steps you should take when cleaning up your finances. So sit down and figure out how much money you have coming in and going out and how much is left over each month to put towards paying off your debts.
#2 Change your habits
Just because you’ve got a budget doesn’t mean you can’t spend any money. You can still enjoy your daily coffee or going out for dinner and drinks with friends, but it’s a good idea to try and change some of your habits. Instead of going out for dinner twice a week, go once and set aside the money you would have spent on the second outing to pay off your debt. If you’ve racked up a huge credit card bill, try going cash-only for a month. Little changes to your habits can build up into a large amount of savings.
#3 Pay more than the minimum
With most credit card minimum repayments at around the 2% mark, it could end up taking you years to pay off your card. For example, if you had a $4000 balance with an interest rate of 17% p.a. it would take you over 26 years to pay off the balance!
Where possible, pay more than the minimum. If you’re making extra repayments on a personal loan, double check with your lender to make sure there are no penalties for paying extra or repaying your loan early.
#4 Transfer your balance
If you’ve stuck all your Christmas spending on a credit card with a high interest rate, consider switching to one with a balance transfer offer. At this time of the year, there are many 0% p.a. balance transfer offers in the market. Here are a few to consider:
Citi Rewards Platinum Credit Card – 0% p.a. for 24 months on balance transfers (cash advance rate 21.74% p.a. thereafter). 1.5% balance transfer fee applies. You will also receive a reduced annual fee of $49 in the first year, reverting to an ongoing annual fee of $149. Offer ends 30 April 2017. Find out more.
Bankwest Breeze MasterCard – 0% p.a. for 21 months on balance transfers (purchase rate 12.99% p.a. thereafter). 2% balance transfer fee applies. Limitations, exclusions, fees & charges apply. Find out more.
Make sure you pay off the balance before the end of the promotional period otherwise the interest rate will increase to a much higher rate!
#5 Consolidate your debts
Now, if your holiday spending was spread over a few credit cards, keeping track of all your repayments and how much you still owe can get a little tricky. You might like to consider consolidating them all into one personal loan. Here are a few to get you started:
MoneyPlace Unsecured Personal Loan – fixed rates based on your credit score starting from 8.90% p.a.* (comparison rates from 8.90% p.a.**) and you can pay your loan off early with no extra fees or charges. Find out more.
SocietyOne Unsecured Personal Loan – fixed rates tailored to your credit score starting from 7.88% p.a.^ (comparison rates from 9.90% p.a.^^) and there are no exit or early repayment fees. Find out more.
Looking for other options? Head over to our comparison service to view more debt consolidation personal loans.
Have you got a savvy tip to pay off your holiday debt? Share them with us in the comments!
* Interest rates range from 8.9% p.a. to 27% p.a. (comparison rates range from 8.9% p.a. to 29.86% p.a.) depending on the risk band. More information can be found at MoneyPlace. Correct as at 20 January 2017.
** Comparison rate based on an unsecured personal loan of $30,000 over 5 years. WARNING: This comparison rate is true for the example given and may not include all fees and charges. Different fees, terms, or a different loan amount might result in a different comparison rate.
^ Interest rates range from 7.75% p.a. to 26.74% p.a. (comparison rates range from 9.77% p.a. to 29.26% p.a.) depending on the loan grade and loan term. More information can be found at SocietyOne. Correct as at 20 January 2017.
^^ Comparison rate based on an unsecured personal loan of $10,000 over 3 years. WARNING: This comparison rate is true for the example given and may not include all fees and charges. Different fees, terms, or a different loan amount might result in a different comparison rate.