Managing your credit card balance

The best advice Mozo was given when it comes to credit card balance, is to never spend beyond your means. There’s more of where that came from, so come in a little closer to hear all the tips we collected over the years.

How should I use my credit card?

Do you remember when Sarah and Steve told you about their crazy credit card debt the other day? How could they reach $20k debt when their limit was only ever 1k? Silly Sarah and Steve missed repayments, accumulated late fees and accrued a ridiculous amount of interest charged on top of their purchases. Now they owe far more than the value of the goods and services they bought in the first place. Oof. What a predicament.

So if this is sounding all too familiar, stop what you’re doing, take the credit card out of your wallet and throw it out of reach in the freezer with the peas and apple pie. Because you need to address bad spending habits and misuse of your credit card immediately.

Your credit card should really be for a rainy day. Save it for emergencies or for big ticket items you just don’t have the cash for immediately but have a good solid repayment plan for that item alone.

If you’re more interested in accumulating points and signing up to credit card reward schemes, it doesn't discount your responsibility. In fact, you need to be even more vigilant about the uway you use your card. Because after the honeymoon period is over or the first 20-50 days interest free per month concession, the interest charged will likely be super high.

Compare some of the best deals on credit cards - last updated 14 May 2022

Search promoted credit cards below or do a full Mozo database search. Advertiser disclosure
  • Apply By 31 Jul 2022
    Bendigo Bank Low Rate Credit Card

    0% p.a. on purchases and 0% p.a. on balance transfers for up to 20 months from account opening (Reverts to 11.99% p.a). A balance transfer fee of 2% applies to the balance transferred. Low annual fee of $45.

    Purchase rate
    0% p.a. for 20 months then 11.99% p.a.
    Balance transfer rate
    0% p.a. for 20 months and then 11.99% p.a. (2.00% balance transfer fee)
    Annual fee
    Rewards program
  • Apply By 30 Jun 2022
    Westpac Low Rate - Cashback Offer

    Enjoy a super low rate of 13.74% with 55 days interest free plus up to $400 cashback - $100 cashback for each month you spend $1,000 or more on eligible purchases in the first 4 months from card approval. New Cards only. T&C's and exclusions apply.

    Purchase rate
    13.74% p.a.
    Balance transfer rate
    6.99% p.a. for 12 months and then 21.49% p.a. (1.00% balance transfer fee)
    Annual fee
    Rewards program
  • Apply By 30 Jun 2022
    St.George Vertigo - Balance Transfer Offer

    0% p.a. for 32 months on balance transfers requested at card application. 0% balance transfer fee applies. Rate then switches to applicable variable cash advance rate. No annual fee for the first year, $55 thereafter. New cards only, Eligibility criteria and T&Cs apply.

    Purchase rate
    13.99% p.a.
    Balance transfer rate
    0% p.a. for 32 months and then 21.49% p.a.
    Annual fee
    $55 $0 in the first year
    Rewards program
  • NAB Low Rate Card

    0% p.a. interest on balance transfers for the first 32 months, plus a low ongoing purchase rate after that means you can spend with confidence. There's also up to 55 interest free days on purchases to help you manage your budget better.

    Purchase rate
    12.99% p.a.
    Balance transfer rate
    0% p.a. for 32 months and then 21.74% p.a. (0% balance transfer fee)
    Annual fee
    $59 $0 in the first year
    Rewards program

Credit card balance tips 101

Ok, so you want to avoid Sarah and Steve’s mistake which is great. But let’s get serious. Credit is dangerous when not used correctly. Let’s have a look at a few ways you can stay in the black and keep well out of the red:

Do's Don'ts
You can easily keep track of your debt if you repay your debt as soon as you’re able. If it’s the same day you used your credit card, then you’re winning. End of week is great too. But if don’t repay till the end of the month, then you leave yourself open to: a) overspending b) missing the due date and thus attracting a late fee. Avoid spending more than 30% of the value of your debt. That way, you can never be so much in debt that you can’t repay it. If you’re struggling to make repayments, aim to make at least the minimum each month until you’re back on your feet again. Just remember, if your limit is $1,000 and you spend $300, you’re better off struggling to repay $300 than if you were struggling to repay $1,000. The interest alone over a course of time could reach in the hundreds on a 20% interest rate.
Keep your credit card at home as often as you can to avoid spontaneous spending. But if online shopping is the culprit, you need to have an honest discussion with yourself about keeping your credit card balance in a healthy state. Woot woot. It’s sale time. And you want everything. After all, money makes the world go round. Why should you stop the mechanics of our first-world consumer society. Hmmm. Put the brakes on right there. Just because you’re used to grabbing bargains when you see them because they’re sooo worth it, doesn't mean you have to. Think about saving more and spending less and start using and wearing what you already have. If it means breaking old bad habits to create positive new ones, you may find new ways of investing your savings rather than spending them. Don’t wait to the due date to pay your minimum requirement. Set up a direct debit to pay your credit card so that you can avoid late fees. Try paying more than the minimum to reduce your debt faster.
Set up online statements. Pronto! Not only are you reducing redundant paper, clutter and helping the environment, but you could also be saving you on average $2 per statement. Might seem like a small amount, but who wants to give money away? Using your card to buy the necessary items? Milk, bread, takeaway coffee? Time to stop. If you’re using your credit card because you’re short of cash and struggling to make ends meet, putting yourself deeper into debt will not help. Think about the adjustments you can make to let yourself breathe easy. Have a garage sale, sell items around the house you don’t use anymore. Even multiple $5 items add up and may cover your week to week essential items till you get back on your feet.

Pros and Cons of using a credit card

The pros are so obvious but we’ll talk about it anyway. Freedom! A credit card can give you financial breathing space, especially when you have big ticket items to pay and your weekly wage just won't cover it. But the financial freedom of using a credit card doesn’t come without a catch. Let’s look at the positives and negatives a little closer:

Pros Cons
Flexibility to buy goods and services exactly when you need them rather than taking the time to save for them. Risk of falling into the debt trap. If you don’t manage your debt properly you could see yourself paying more in interest than the item is actually worth.
Universal access. This could almost mean that a credit card is like a universal currency. So it doesn't matter where the card was established, you can use it wherever you go. What you need to be aware of his hikes in fees for every purchase plus, expect to be charged a currency exchange rate fee on top. If you get in the habit of carrying your credit card around and not much else, and come across a business that don’t accept credit cards, expect to pay heightened fees if you need to withdraw cash at the ATM. The rate is exorbitantly high at 20% or more on the amount you withdraw.
If accumulating reward points is your agenda and you can afford to repay your purchases the day you made them, then this is a great way to receive some benefits on the side. If they’re there to be had and you can afford to repay asap, take advantage! Not enough cash in your bank account to pay for that new flat screen? Then you probably shouldn’t make that purchase. Unless you’re absolutely certain you can repay the cost of the flatscreen by the end of the month, do you want to risk going into debt with more than the token TV? Once you start using the liberty and freedom of your credit card, it can be quite addictive or at least give you the false security that you have more money than you can budget repayments for. Always be realistic about the things you need vs the things you can afford to avoid the swirling black hole that many Australians suffer as a consequence of purchasing beyond their means.

How to budget for your credit card repayments

This is no easy task! And unless you take control, manage your finances and grab debt by the horns, expect your credit card debt to escalate without you even noticing while dragging you down a beaten path of despair. Sounds terribly bleak, doesn't it? Well, we don’t sugar-coat anything. So try these repayment tips out and see for yourself:

  • Pay more than the minimum requirement to inch your way closer to being debt-free
  • Dedicate weekly increments from your income to reduce your debt faster
  • Sell items around the house you no longer need at your own garage sale, local market stall or on online market shops like gumtree or eBay to help with repayments
  • Receive birthday or Christmas cash as a gift? Lucky you! Instead of buying yourself something, use it to help with your debt
  • Cash bonus from work? Nice one. Spread the love to your credit card debt. Helping your debt out is an even bigger bonus.
  • Money-making hobbies: love baking? Package your homemade cookies and sell them door knocking in your local community or at your workplace.

Remember: Avoid using your credit card and opt for cash. If you don’t have the cash, consider not using your card at all. If you need extra help working out your repayments for your current credit card debt, use Mozo’s credit card debt repayments calculator.

Minimum repayment – what you need to know?

So your credit card debt is 700 and your minimum repayment is $35 per month? Well if your interest rate is up to 20% or more, you’ll be paying a lot more than the 700 in the long run. Fact: if you only paid the minimum required repayment, you’d be barely touching the interest rate amount itself, let alone repaying the principal. That’s why you really need to dedicate a lot more than the minimum amount to make a true impact on the total amount you owe. 

Balance transfer for reducing your credit card bill

Okay, we’ve talked about a few different ways to manage the balance of your credit card which, if you’re smart about it, can lend itself to also reducing your debt. But have you considered using a balance transfer?

Balance transfers can be a great band aid solution when it comes to absorbing your debt, and fast. By securing a credit card with a lower interest rate, you can shave possibly hundreds or thousands off your debt. Especially if you’re lucky enough to secure a 0% balance transfer. That means if you owe $6000 on 20% interest, and secure a 6 month balance transfer at 0%, you then not only save 200 per year but you can create a budget to pay it off within the 0% promotion. If you follow this formula, you should be able to get the general gist on how to take advantage of balance transfers:

$6000 debt divided by 6 months = $1000 per month


$1000 divided by 4 weeks in a month =

$250 per week repayment for 6 consecutive months to benefit from the 0% promotion.

Mozo are in touch with some of the best lenders in Australia who will be more than happy to talk you through your options and which credit card will best suit you. To start your search, visit our credit card section.

^See information about the Mozo Experts Choice Credit Card Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.