It’s that time of the year again… as we enter the last quarter of the year and prepare ahead for the festive season that will soon be upon us, several credit card companies have already joined the fray for excited shoppers, providing cash backs, fee waivers and discounted Uber rides to users ahead of the Christmas season.


So, would you join the eager shoppers or be a part of the holiday budgeters?

Considering that household debt is rising at an alarming level – Reserve Bank statistics on household balance sheets show that total debts have risen from 123 per cent of GDP to 137 per cent over the past five years, or a 14 percentage point increase – going with the latter could save you some pretty penny you could use towards paying off your mortgage or other debts.

Did you know that:

  • Average Australian spends roughly over $1,000 on Christmas
  • One in five persons pay for Christmas presents on credit card
  • About one in five take more than three months to pay off Christmas debt

[Source: ASIC website]

It isn’t surprising that debt reduction is the foremost New Year resolution for not only Australians but also people across the world. Today, we share a few effective tips to blast that debt, ensuring you enter the next year with better control over your finances and more creative resolutions!

Have a budget
– We know you have heard this one before, but there is no denying that setting a realistic budget should be your topmost priority if you plan to be financially fit for life. We say ‘realistic’ because there is no need to deprive yourself  – all you need to do is cut down on the unnecessary expenses and see how much you end up saving each month. You can apply this amount towards your monthly repayments to pay off your mortgage faster. Use this extra repayments calculator to see the numbers wipe off your home loan magically.

Another important thing is to break the cycle of credit – if you can’t stop yourself from swiping your credit card for more, hand it back to the bank to stop creating more debt for yourself. In case you are after the reward points and the sweet deals offered during the holiday season, use your credit card only up to a set limit, keeping the cash aside at the beginning of each month, to pay off your credit card bill at the end of the cycle.

If you think you cannot exercise so much control – may we suggest that you keep things simple by only using debit, not credit?

Use an offset account
– Using an offset account to keep all your money could help you save substantially on your mortgage. By moving all your money into an offset account linked to your mortgage, you effectively earn interest at a rate equal to your home loan interest rate. By receiving your salary in an offset account and using a credit card for all your expenses, you can ensure that you have maximum balance in the account most of the month, saving on the interest on your mortgage daily.

Read more about home loans and offset accounts here.

Try balance transfer
– Do you know how Annie tackled her debt? By taking more debt! Yes, thanks to the increasing competition in the market, credit card providers are offering low interest rates and interest-free periods to attract clients. Annie took advantage of this by using lower-interest rate credit cards to pay off her debt of $30,000, incurred on other credit cards.

By simply transferring her balance to a low-interest rate credit card and paying off the debt before the expiry of the promotional period, she got the hefty debt off her back, smartly and swiftly.

“The key to balance transfer is to pay off the debt before the promotional period ends. Interest rates after this period are quite high, and the whole strategy would fall flat if you don’t pay off your debt completely during the promotional period,” quips Annie.

Compare deals
– There are murmurs to be heard that interest rate is going to hike in the near future. The Big 4 have already increased their rates, out of turn, causing much distress to the borrowers. However, the mortgage market in Australia remains heated for now, with lenders competing fiercely to gain new customers and keep the existing ones from leaving. As a savvy borrower, it is pertinent you take advantage of the situation – ensuring you are on the best available deal in the market (compare mortgage rates online).

Are you entitled for a professional package? Could consolidating your debts with your home loan save you more?

There are cheap home loan deals in the market that can help you save considerably on your mortgage repayments. Use this mortgage repayment calculator to see how much you can save by switching to a lower interest-rate home loan. However, refinancing is not free, and it helps to crunch the numbers before switching to ensure it is the right decision for you. Contact a mortgage broker to know more.

Of course, you could use a part of the savings to purchase Christmas gifts – cutting down on some more credit in the process!

By Vidhu Bajaj
HashChing Content Writer


HashChing is helping Australians by providing access to the pre-negotiated home loan deals. Obligation free consultation with one of our partner brokers might save you time, hassle and money.

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