292 Payneham Road, Payneham SA 5070

(08) 8362 0060

(08) 8362 0061


CREDIT CARDS – 3 ways to escape the credit card debt trap

CREDIT CARDS – 3 ways to escape the credit card debt trap

We all like to put things on credit from time to time. But you may be shocked to find out how much your credit card debt really costs.


There’s no question that credit cards are a convenient way to pay for things you need – or want– but that you haven’t quite managed to save for.

Whether it’s for essential items, like car insurance and rego or a new fridge, or the ‘nice to haves’ like a holiday or new clothes, having access to easy credit can be really convenient.

But is your credit card costing more than you’ve bargained for?

The real cost of credit

A recent estimate puts Australia’s total credit card debt at $33 billion1  – which works out at more than $3,000 for every card holder.2

This may not seem excessive: if you paid off the minimum as required each month, it wouldn’t take too long to pay it off, right?
Wrong. If your card has an interest rate of 18%, it would take you 25 years to clear that debt, paying just the minimum amount.

And here’s the worst part of all – that $3,000 credit card debt will cost you $6,521 in interest. This means everything you bought could end up costing more than three times the original price.

Long term credit card debt is not only expensive, it can also prevent you from achieving other financial goals, like saving for a home or investing. And if things go wrong, there can be serious consequences, like bankruptcy, repossession or other legal repercussions.

So, if you have credit card debt that’s holding you back, what can you do to break free?

Step 1: Credit cards – Pay it off as fast as you can.

The first step is to pay more than the minimum shown on your bill. In the example above, if you paid $300 a month instead of the minimum of $61 a month (reducing over time), you could clear your debt in less than a year, and pay far less interest – just $222 in total.3

Whenever you get extra money coming in – like a bonus or tax return – use it to help pay down your debt. Or, if you’re struggling to find extra cash, consider selling something on Gumtree or eBay: like that power tool you don’t know use or the designer heels that you can’t walk in. Then put the money towards paying your debt. It all adds up – and reduces the interest you’ll pay.

Step 2: Credit cards – Don’t go back there!

So you’ve cleared your last credit card. Now what? You’ll want to make sure you never go back into this type of debt again.

This is where budgeting comes in – and living within your means. While it may seem dull, it’s much better than being a slave to your card, and will free you up for a brighter and more prosperous future. You can find tools to help you create a budget and track your spending at moneysmart.gov.au.

If you do use your card, pay it off in full every month. And remember to leave the plastic at home at sale time – by the time you pay off the interest, you’ve no longer bought a bargain.

Step 3: Credit cards – Save for the future

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

Once your cards are paid off, you’ll find you have extra money in your pocket that you were using for your repayments. Rather than increasing your spending, put some money aside in a high-interest account as an emergency fund – so you have funds you can dip into when you need them.

Then, with no debt and some money behind you, you can start thinking about using it to build your future wealth – maybe buy a home, invest or start a business.

Find out more

If debt is holding you back, we can help guide you to break free from debt and build wealth for the future. Call us today on 08 8362 0060.


1. ASIC MoneySmart https://www.moneysmart.gov.au/borrowing-and-credit/credit-cards/credit-card-debt-clock
2. ASIC MoneySmart Credit Card Calculator
3. ASIC MoneySmart Credit Card Calculator


Financial Advisor Adelaide

We are an award winning practice that has been providing financial advice to South Australians since 1969. We really enjoy getting to know our clients and building a relationship with them that lasts over many years. We have a diverse range of clients from mum and dad to AFL players to ASX CEOs. All of which have a diverse range of financial advice needs and very different relationships to maintain. Our clients describe a 'breath of fresh air', personable, expert and people with high integrity. Clients have also mentioned that they are not treated as a number and the advice is specific to them. Working with clients for clients.

Financial Planner Adelaide

The one most rewarding thing about being a financial planner in Adelaide is when you have been working collaboratively with a client in developing and building their goals and objectives and the come to fruition. This give both the clients and myself a real sense of achievement and to use the famous quote 'are we there yet?' and together we can say YES! There has never been a better time to look towards what you want to achieve and start a financial plan so you can get there too.

Financial Planning Adelaide

A person's financial story is like a jigsaw puzzle... "lots of pieces needing to be put into their correct places". A financial adviser can assist a client to put the pieces in the right places by having a series of simple conversations about where a they are currently situated, where they want to be and what strategies can assist them. Every client has a different financial story and goals. Each jigsaw puzzle will always be different. A good financial adviser is experienced at putting together a wide range of jigsaw puzzles. Helping a client put their own puzzle together and seeing their satisfaction is a wonderful feeling.

Barry Phillis, Chris Scriva and Owl Financial Management Pty Ltd are Authorised Representatives of GWM Adviser Services Limited Australian Financial Services Licensee Registered Office at 105-153 Miller Street North Sydney NSW 2060 and a member of the National Australia group of companies.

GENERAL ADVICE WARNING: The advice on this site may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information.

Opinions constitute our judgment at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. View Terms & Conditions >