Is debt on credit cards really slowing down?

1 October 2008

Australians love using their credit cards. As credit cards can be used to purchase products almost everywhere, people are using them in abundance. As Christmas approaches, stores are expecting plenty of business. This makes it likely that shoppers will be using their credit cards frequently to pay for their purchases. Levels of credit card usage have increased in the past year, but people are making an effort to control their debt.

Reports are showing that while credit card transactions rose in July, credit card debt levels are falling. Owing balances on credit cards have come down as people try to control their debt levels. This means that more people are making a solid effort to pay off their owing credit card debt. It appears that the average owing balance on credit cards fell by approximately $10 in the past few months. As Australian now owe more than $32 billion on credit cards, this is a pretty good start to reducing debt levels.

With the Christmas period approaching, it means that credit cards will be used on a regular basis. While this isn't a bad thing, it could mean that debt levels will rise significantly. If you do plan on using you credit cards over the holiday period, you should make an effort to use them wisely. By doing this, you can avoid a nasty shock when your credit card bills arrive in January.

One option available to you is to get a balance transfer credit card. This means all your owing balance on other credit cards it transferred to the one credit card. Balance transfer credit cards often come with an introductory period with low interest rates. If you do like this idea, compare credit cards to find a credit card that suits your spending needs.

If you are interested in balance transfer credit cards, be sure to do your research. Look for the best credit card that offers:

A low interest rate.
Interest free periods.
Competitive annual fees.
A good rewards program (if you wish to use one).
An online banking service.

If you're not interested in a balance transfer credit card, there are other ways of controlling how much you spend over the holiday period. You can try using only one credit card for all your holiday seasons needs. This will make it easier to keep track of your spending. If you have a rewards program on your credit cards, consider redeeming your points for your Christmas spending. Many reward programs offer products in exchange for reward points, so you can use reward points for presents. If you have racked up Frequent Flyer points, use them when travelling to visit your relatives.

Cash advances are also available on many credit cards. A cash advance allows you to take money straight from your credit card so you can pay in cash. A downside to cash advances is that they are charged interest straight away, instead of having an interest free period. According to recent reports, Australians are not using cash advances as much as they used to. The drop of cash advances being used this year is quite significant compared to last year's use of cash advances. This means people are taking more care on how much interest they are being charged, even if they are using a low rate credit card.

So to help avoid massive credit card debt: