Credit card debt is one of the most common debts that Australians face. High interest rates and fees mean credit card debt can quickly spiral out of control, making it very difficult to make any progress, or regain financial stability.
So how do you pay off your credit card?
Even when it seems impossible, there are ways to pay that credit card debt down to $0, using a few proven strategies. This article outlines 6 simple and achievable ways to put you on the right path to becoming debt free, even if you can’t currently see a way out.
1. Stop using your credit card(s)
If you’ve run up a credit card debt that you’re having trouble paying down, the worst thing you can do is continue to use your credit card. The best thing you can do, right now, is take it out of your wallet and put it away somewhere. Also, remove it from your banking apps. When you don’t have immediate access to your card, you have to make a conscious decision to do something you know isn’t going to be good for you, longer term.
2. Starting at the top of credit card debt
If you have more than one credit card, checking the annual percentage interest rate of each of your credit cards is the best place to start. These interest rates contribute to your credit card debt growing each month, without you spending a cent!
Once you’ve established which card has the highest interest rate, make that card your priority to pay down.
So, if you’re paying as much as you can off each of your cards (or other debts) each month, switch to minimum monthly payments on all but your highest interest card. You then focus on paying off that high interest credit card first. Pay as much as you can onto it, using money you’ve been using to pay off the other cards, plus any spare dollars you can scrape together each month.
Once you’ve cleared that card, cancel it and move on to paying off the credit card debt on the card with the next highest interest rate. This is a common strategy called the ‘Avalanche Method’; you start with the debt that has the highest interest rate and work your way down.
3. Starting at the bottom of credit card payments
If you have trouble with motivation, the ‘Snowball Method’ for paying off debts may suit you better. This strategy involves paying off your smallest debts first, rather than paying down the highest interest rate debt first. Results are faster when you pay off smaller amounts, so this method can really help with your momentum.
Once you’ve paid off the card with the smallest debt, use any spare money to pay off the next lowest.
4. Transfer credit card debt to 0% interest card
Many credit card providers offer a 0% interest period on balance transfers. This interest free period can be anything from six months to two years, depending on the card. So doing a balance transfer to a new card can be a good way to pause interest payments, while you get on top of your credit card debt.
If you choose this option, do some homework to check which card is right for you. The interest rate the card switches to after the interest free period may be higher than your current card, so make sure you can pay off the credit card debt before the $0 interest period runs out! Also, be aware that if you do make any purchases with your new credit card, during the 0% interest period the purchase interest rate is often higher than the basic interest rate. Make sure you clearly read the terms and conditions of the credit card you are looking at, so you’re aware of all of the possible charges.
5. Tighten up your budget to prioritise debt
When you know exactly where all your money goes, it’s easier to see where you can pull back a little. Use your bank and credit card statements to work out your monthly outgoings. Next, split these into essential and non-essential expenses.
- Essential expenses are non-negotiable, like rent/mortgage, power bills, petrol, groceries etc.
- Non-essential expenses are nice-to-have things like streaming subscriptions, eating out, entertainment and shopping.
Start by looking at your non-essential lists to see where you can save a bit of money. Even if it’s just a temporary measure while you pay off your credit card debt.
A few examples:
- If you have multiple streaming subscriptions, cancel or pause some.
- Halve the number of times you go out to eat a month.
- If you don’t use your gym membership enough to warrant the cost, cancel it.
- Look at cutting back on shopping for non-essentials. If you don’t need it, don’t buy it!
You’ll be surprised how much money you save when you cull non-essential expenses. Use that money to pay down your credit card debt, on top of what you’re already paying, and you’ll see a big difference in how fast your debt shrinks.
What about those essential expenses? Well, it is possible to bring those down too. Read our post on Loyalty Tax, to see how you can lower the amount you pay for your essentials by simply shopping around.
6. Professional help to pay off or consolidate credit card debt
If you are feeling overwhelmed and can’t see a clear way out of your predicament, consider talking to a professional debt counsellor.
One way to make debts more manageable is to consolidate your debts, including credit card debt into one lower interest loan. This makes paying multiple debts/credit cards easier as there are less fees and just one manageable loan to focus on. A debt counsellor can advise whether this is the right option for your own personal circumstances. If not, they also advise on other options, such as payment plans and budgeting.
A final note on credit card debt:
When it comes to credit card debt, like tax debt, the longer you have it, the bigger it gets, so don’t ignore it. Missing just one monthly payment can mean additional interest or penalties added to your outstanding balance.
So, make your number one priority paying off your credit balances this year. Using one or more of the above strategies will help lower your stress levels and get you well on your way to being debt free. It won’t happen overnight so whatever strategy you choose to help you, the most important thing to remember is to stay focused and motivated.
Did you know?
- Total credit card debt in Australia: $41.54 billion
- Total number of credit card accounts: 12.52 million
- Average balance per credit card account: $3,317
- Average monthly credit card repayment: $2,858
- Average credit card balance being charged interest: $1,487
Source: 2025 credit card statistics from Money
Further reading:
- Credit card debt statistics
- Avalanche Method of debt payment
- Debt payments: Snowball Method
- Get debt under control
Please note, the content in this article is for informational purposes only. You should always consult a professional for advice on your own particular circumstances.
