When the financial pressure of Christmas arrives, it can be tempting to turn to the credit card for help.
The holiday period is often a time when expenses mount with presents to buy and social gatherings to attend, and the Hunter is no exception.
But what happens when the festive season ends and you find yourself with debt to clear?
A Maitland financial expert has come up with five ways Hunter residents can quickly and effectively tackle their post-holiday credit card debt.
Mortgage Choice Maitland owner and principal Mike Wilson said there were several ways people could quickly re-gain control of their financial situation.
“Australians often find themselves using their credit cards to cover the cost of gifts and various social occasions,” he said.
“Unfortunately, it is quite easy to lose track of your expenses and end up spending more than you can actually afford.
“Some people may be in for a shock when they receive their credit card bill in the New Year and realise how much debt they are in.
“While paying down credit card debt can seem like a daunting task – especially first thing in the New Year – it doesn’t have to be.”
Mr Wilson said setting a detailed household budget, including expenses such as bills and groceries, is a good way to figure out where you can cut back on spending.
He said paying more than the minimum repayment amount each month was also an important way to get ahead of credit card debt.
“The minimum payment is usually two per cent of your closing balance,” he said.
“For example, if you owe $4000 on your credit card and you only make the minimum repayments of $80 a month, it will take you more than 21 years to pay it off.
“By paying $200 a month, you’ll have your credit card paid off within two years.”
Mr Wilson said switching to a different lender may help pay off a debt faster, especially with lenders that offer a zero per cent interest rate for a period of time.
He said limiting credit card use and consolidating credit card debt with an existing mortgage account could also help clear a backlog of money owing.
“If you don’t want to switch lenders, but don’t want to be hit with a similar level of debt next year, it may be worth speaking to your lender about reducing your current credit card limit,” Mr Wilson said.
“By reducing the overall credit card limit, you won’t be able to accrue quite as much debt on your credit card, which will ensure you remain in a good financial position.”