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Changing and chopping? Credit card hopping can be a trap

By Cameron Micallef · September 18 2019
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Changing and chopping? Credit card hopping can be a trap

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By Cameron Micallef · September 18 2019
Reading:
egg
Credit card

Australians struggling with credit card debt who then switch providers are finding themselves in more debt, despite initially saving money in the introductory periods.

According to GetReminded co-founder David Wareing, a third of credit card hoppers find themselves in 10 per cent more debt by the end of the interest-free period.

“Credit card hopping is when you find another credit card with a lower interest rate, often zero interest for six or 12 months, then transfer the debt to pay it off, which works well if you are disciplined and do just that,” Mr Wareing explained.

But many don’t, according to the founder, who highlighted that, “in fact, 1.9 million Australians are struggling with credit card debt with the average credit card balance just over $3,000 and two-thirds of that is the average amount accruing interest”. 

He offered up three pieces of advice to those struggling with debt to help pay it off sooner:

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3 tips to paying off debt sooner

Shop around – With hundreds of credit card providers to choose from, Mr Wareing advised that shopping around can help Australians ensure they are getting the best deal.

Close old credit card accounts – While it may seem to be “an obvious thing to do”, many people just pop their old credit card in a drawer as a “just in case” and end up using it, then having two credit cards to pay off instead of one.

Mr Wareing warned individuals that they should cut up the old credit card and close the account, “or you could end up in more debt and it could impact you if you apply for a mortgage”.

Set reminders – The co-founder said those who struggle with the allure of a new credit account should set reminders to be automatically notified when the interest-free period ends on a new credit card to ensure they don’t get stung with huge interest rate rises.

Changing and chopping? Credit card hopping can be a trap
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About the author

Cameron is a journalist for Momentum Media's nestegg. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leveraging their insights to grow your portfolio.

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About the author

Cameron is a journalist for Momentum Media's nestegg. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leveraging their insights to grow your portfolio.

Join The Nest Egg community

We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians

Your email address will be shared with nestegg and subject to our Privacy Policy

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