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  • Writer's pictureVictoria Wallis-Smith

Is your credit card statement bad news?

There’s no doubt that credit cards are a convenient way to pay for things – no more cash payments for a coffee or takeaway lunch. Even paying for a sausage at Bunnings can be ‘scanned’!


But are you using credit to pay for things you don’t have the money for – are you locked in a cycle of credit card debt?

Locked in debt. Cycle of debt. Money Coach.

You & your credit card

How you use your credit card – or rather what you use it for – is likely to have a big impact on how you feel when the statement arrives, and you see that ‘balance owing’ number. Are your feelings around:

  • Panic? .... “How will I pay that?”

  • Guilt? …. “I wish I hadn’t bought that bag/gym membership/fabulous dress!”

  • Shock? …. “Did I really spend that much in a month?”

  • Calm acceptance? …. “Yep, that looks right.”

If you sit around the first three, it's looking like your credit card is less of a convenience and more of a crutch. But fear not, I’ve been there, and I can assure you there’s a better path – if you want to take it.


Here’s a few things to consider if you want to be in control of your credit card, and not have it (and the monthly statement) control you.


The real cost of credit

If you struggle to clear your credit card each month, it’s probably costing you a lot more than you realise.


The average balance on a credit card that's attracting interest is $1,500. That doesn’t seem excessive – if you pay the minimum each month, it wouldn’t take long to repay, right? Wrong.


If your card has an interest rate of 18% and you pay just the minimum amount, it will take you over 14 years to clear that debt. And here’s the worst part – that $1,500 credit card debt will cost you $2,276 in interest.


Let me break that down – the $100 you spent cost you an extra $150!


So, I think we can agree, if you don’t clear your credit card, it’s expensive – really expensive! And the money you’re spending on interest is money you don’t have – money that you can’t spend or save because it’s being sucked into paying off credit card debt.


But I’m a money coach – I’m not going to leave you hanging. There’s a way out…..


Step 1: Pay it off as fast as you can.

The first step is to pay more than the minimum.


If you paid $140 each month instead of the minimum, you’d clear your $1,500 debt in a year, and pay far less interest – just $121 instead of $2,276.

Calculated via: https://moneysmart.gov.au/credit-cards/credit-card-calculator


And to your question “Where do I get $140 from?” Use whatever extra money you can get – from working an extra shift, or your tax return. If that’s not an option, consider selling something on Gumtree.


It all adds up – and importantly, reduces the interest you’ll pay.


Step 2: Don’t go back there!

So, you’ve paid the balance in full – no more debt. Now what?


How about making sure you never go back into this type of debt – this is where budgeting comes in…. and before your eyes glaze over at that dreaded word, check out a previous Nutshell Money blog, Budgeting… it’s not a dirty word.


There’s a lot of books, podcasts, and websites with great information on financial management. But if you feel you need more support to do money better, then consider working with a money coach.


(And if you continue using a credit card, keep paying it off every month!)


Step 3: Save for the future

No matter how good your intentions are, there may be times when you need to cover extra expenses – but that doesn’t mean you should rely on the credit card.


Once your debt is paid off, you’ll have extra money available to build your balance in a high-interest ‘Rainy-Day’ account.


It’s going to take some time but with some money behind you, you’ll be feeling a lot more secure and confident. And who doesn’t want that?


Need help?

If you feel you need help – whether it’s working out how to clear your debt or how to plan for your expenses (aka budget) – then book a call with Victoria Wallis-Smith to discuss your needs.





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