Australians collectively owe around $18 billion on credit cards at an average interest rate of 19.99% p.a. If you're carrying a balance, this guide shows you the fastest, cheapest ways to get debt-free.
Most Australian banks set the minimum repayment at 2% of the closing balance or $25 — whichever is greater. This sounds manageable, but it's designed to keep you paying interest for as long as possible.
| Balance | Min Repayment (2%) | Time to Pay Off | Total Interest Paid |
|---|---|---|---|
| $2,000 | $40/month | ~11 years | ~$1,800 |
| $5,000 | $100/month | ~30+ years | ~$8,000+ |
| $10,000 | $200/month | ~30+ years | ~$16,000+ |
List all your credit cards by interest rate. Put every extra dollar toward the highest-rate card while paying minimums on the rest. Once the highest-rate card is paid off, redirect everything to the next highest. This minimises total interest paid.
Pay off the smallest balance first regardless of interest rate. The psychological wins from eliminating cards keep you motivated. Studies show this method works better for people who struggle with debt payoff discipline, even if it costs slightly more in interest.
Many Australian banks offer 0% balance transfer promotions for 12–24 months. Moving your high-interest balance to a 0% card means every dollar of repayment goes directly to principal — not interest.
If you have multiple credit cards, a personal loan at 8–12% p.a. to consolidate them can save significantly vs 19.99% p.a. credit card rates. The fixed repayment schedule also forces disciplined payoff. Make sure you don't run the credit cards back up after consolidating.
Calculate Your Payoff Plan →Once paid off, decide whether to keep or cancel the card. Keeping one card for emergencies and rewards is fine — just set up autopay for the full balance each month so you never pay interest again. Consider lowering the credit limit to reduce the temptation and improve your home loan borrowing power if you plan to buy property.
Yes. Reducing your credit utilisation (balance vs limit ratio) positively impacts your score. Payment history is also the single biggest factor — every on-time payment helps rebuild a damaged score. Results typically show in Equifax/Experian scores within 1–3 months.
It depends. Closing a card reduces your available credit, which can temporarily affect your credit score. However, if you're applying for a home loan, lenders count your full credit limit as a liability — so closing unused cards can increase your borrowing power. Weigh both factors for your situation.
Yes — and it often works. Call your bank and ask for a rate reduction, especially if you have a good repayment history. Alternatively, use a competing balance transfer offer as leverage. Banks would rather reduce your rate than lose you to a competitor.