Spend sensibly this silly season – Your Festive fun could foul your new year!

Last December, Aussies racked up a record $28bn in personal credit card transactions, leaving many households unable to clear debts and paying extreme interest charges.

While some people use credit cards strategically and pay them in full each month, those with outstanding balances can pay interest rates over 20% – pushing them into a cycle of debt.

Although it is tempting to use credit to buy things you don’t have money for, this could lead to a lot of stress and financial difficulties in the new year.

If you have a Bankwest low-rate credit card, the interest rate is 12.99%. If you want it paid off before next Christmas, the repayments for every $1,000 spent would be $90 per month, and the interest costs over the year would be $59.

If you were only to make the minimum repayment, it would take over 6 years to pay off $1,000, and the interest cost would be $448. Any missed repayments attract a $25 fee, which you will also pay interest on.

Cash advances incur a 3% fee and have an interest rate of 21.99%, so avoid taking cash out from your credit card at all costs!

If you had a Latitude Gem credit Card, the rate is 27.99%. For every $1,000 spent, the repayments would be $96 per month with an interest cost of $130 over the year. Minimum repayments would take 7 years, 9 months to pay off and include $1,379 in interest! This doesn’t include the monthly fee of $10.95 or any fees for late payments or cash advances.

Buy Now Pay Later is another form of credit that makes it easier for you to overspend. It may be easy to spend $1000 on one of these accounts, but it could be difficult to find the money to repay it in the weeks after Christmas. Account fees or late fees will also add to the cost and interest if you are paying with your credit card.

If you have a credit card or BNPL account, check your rates and fees and make sure there isn’t a better option available to you. 

A better option would be to set a budget for Christmas and try to stick to it. Stay on top of your finances and don’t spend money that you don’t have. Save yourself the stress, that pressie you bought Aunty Joan and Uncle Bob will probably end up at the op shop anyway.