Taming the credit monster

Why we choose credit
Australians like the flexibility and ease of buying things on credit. We owe nearly $38 billion, or almost $2000 per adult just on credit cards alone. On top of this, we have mortgages, car loans and ‘buy now, pay later’ platforms like Afterpay, Zip and others. Many of us also have a ‘set and forget’ mindset around credit, simply paying our monthly repayment and not thinking too much about the cost.

But we should be thinking about it. In its 2017 study of credit cards in Australia, the Australian Securities and Investment Commission (ASIC) estimated that we could save $621 million if we all moved our credit card debt to a lower rate card. The problem though? They also found that people that did this, didn’t cancel their old card and 15% actually increased their debt level by more than 50%.

Debt and the emotional toll
Behind these numbers though there is also an emotional toll. People who over-extend themselves can feel lost and unable to see a path out of debt, which can lead to deeper mental health concerns and relationships impacted.

The first step to getting back in control
But there are things you can do to get back in control. The first is to create a budget. Information is power and a lot of people don’t know how much they are spending or what they are spending it on. Using your bank statements and our budget planner you can find out what your total debt repayments are and what some of your expenses are that you could stop to pay down your debt.

Simplify and consolidate you debt
Once you have a good handle on where your money is going, the next step is to simplify. If you have multiple credit cards (and maybe other loans as well), the complexity can be overwhelming. One solution to this is debt consolidation, whereby you take out a personal loan to pay off all your other debts. Apart from meaning that you only have one debt to manage there can be other benefits including a lower interest rate (so your total interest paid to clear the debt is much lower) and a clear timeline to work to clear your debt.

We can help
There are a range of options on personal loans, but at BankVic we can guide you step-by-step through the whole process. If you want to tame your debt monster and feel in control of your finances again, visit us at Personal Lending in branch or call 13 63 73 to get expert guidance from one of our bankers. 

This article was published on 20 January 2020 and the information was current at that time. Normal lending criteria apply to all loan applications. The information in this article is general in nature and does not take into account your personal situation or needs. Please consider whether it is appropriate for you before acting on this information. Police Financial Services Limited ABN 33 087 651 661 – trading as BankVic AFSL 240293 Australian Credit Licence 240293