The quickest ways to clear your credit card debt

15 January 2018, Originally from

Still can't believe how much you spent over Christmas? These tips will help you start financially afresh this year.

If you got a little caught up spreading Christmas cheer this year - i.e. buying presents you couldn't afford - you’re not alone.

It’s estimated that Aussies spent a staggering $22.1 billion - that’s right, billion! – over the festive period.

A recent survey by found that when the costs are broken down, Aussies spent an average of $492 on presents and a further $1,178 on all the ‘necessities’ that come with Christmas such as food, alcohol, travel and decorations.

Deborah Southon, director of debt solutions provider Fox Symes, says it’s all too easy for people to feel pressured to overspend at Christmas.

“It’s easy to get caught up in the excitement of the festive spirit and ignore the fact that eventually the credit card statement will arrive and it will all have to be paid off,” she says.

While putting out-of-the-ordinary purchases on your credit card may seem like a good idea at the time, it can set you off on a bumpy financial road for the rest of the year - especially if you are paying 20% interest or higher on your purchases.

“We always experience a surge of calls in January from people seeking help with their debt. Often people realise that the Christmas period has compounded their existing debt problems,” Deborah says.

“Many are optimistic at the beginning of the New Year and see it as the perfect time to get their financial situation in order or pledge to do something about it as their New Year’s resolution.”

If this sounds all too familiar, Deborah has some advice on how to bounce back from your financial hangover.

Assess your situation and think smart

If you’ve run up credit card debt, then pay as much as you possibly can to reduce the debt. Try and make weekly or fortnightly payments because this will reduce the balance quickly and minimise the interest you pay.

Pull together a budget

Start by writing down your household income and then your primary expenses - for example rent, mortgage, utilities, car costs, school fees, etc. Be realistic and look at how you really spend your money and identify items and areas where you can cut down on your spending.

STOP using your credit card

This is the most important rule to stick by. Stop using your credit card to buy things you simply don’t need or can’t purchase with cash. If you truly want your budget to work, you need to regularly monitor your spending against it. Stick to your plan and you’ll begin to save.

If you don’t put a plan into place, the reality is that credit card debt can continue to accumulate throughout the year and if it isn’t addressed straight away, can really create financial pressure.

“People often ignore or forget the fact that when they buy something on credit they may be spending money they don’t actually have. This could lead to a situation where the debt becomes unmanageable,” Deborah says.

When it comes to staying on top of debt and spending throughout the year, here’s Deborah’s advice:

Learn how to use a credit card

A credit card can actually be a very useful tool. However, it can become a problem which can lead to unmanageable debt if it’s used unwisely. Before you decide to use credit to buy something, ask yourself:

  • Do I really need this item?
  • Can I afford it?
  • Can I pay off the balance on my credit card immediately?

If you answer “no” to two or more of these questions, then you should walk away and not make the purchase.

Limit yourself to one credit card

If you have more than one credit card, identify which one has the highest interest rate, and stop using it immediately. Do all you can to pay it off quickly. Most importantly, avoid having more than one credit card.

Prepare for the festive season early

If the festive period is problematic for you, why not set up a Christmas account and deposit a certain amount in it each pay period? Look at it as a form of “bill smoothing” which is bound to ease the impact of Christmas spending and unexpectedly going over your budget.

This article originally appeared on

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