Three tips for paying off multiple credit card debts

By Leo Rodino posted on February 09, 2017

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There are plenty of benefits to having multiple credit cards. You can build up good credit with multiple organisations, and enjoy the added flexibility of having a card that’s acceptable with every merchant. You can also rack up rewards points with multiple brands if you so desire.

There are also drawbacks, however. Having multiple cards makes it harder to manage your finances at times, and this can lead to a potentially bad credit file. If the debts start to pile up, you’ll need to be proactive about paying them off.

Here are three tips that can help you get back on track to strong financial health.

1. Pay off cards in the right order

If you’ve got multiple cards to pay off, the first question is clear – where do you start? Which card do you prioritise? According to the Financial Counseling Association of America, there are multiple schools of thought on this. President Kevin Weeks explained that you may go after the card with the highest interest rate first, as this will keep your debt from continuing to increase. Note that some credit cards charge very high interest rates which can very quickly add up to your outstanding debt.

There’s another viable tip, though. You may also decide to go after the smallest balance first. This way, you can quickly pay off one of your cards and thereby simplify your debts for the future. It all depends on the size of each bill and how much capital you have to pay them down.

2. Reduce financial risk wherever possible

Credit card debt is always a risky situation, and ideally, you’d like to mitigate that risk. The Australian Securities and Investments Commission says that one way to do this is to close credit card accounts immediately once you pay them off. This way, you’ll never be tempted to rack up debt on them again.

Additionally, you may want to seek accounts with lower credit limits in the future. This reduces your exposure to future debt and helps keep your financial burden under control.

3. Refinance your credit card debt

Consider refinancing your credit card debt by rolling it into a lower interest rate, long term loan facility, such as your mortgage loan or a suitable personal loan. A MoneyQuest mortgage broker can help you refinance your credit card debt and reduce the financial pressure moving forward. 

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Disclaimer:

This article is written to provide a summary and general overview of the subject matter covered for your information only. Every effort has been made to ensure the information in the article is current, accurate and reliable. This article has been prepared without taking into account your objectives, personal circumstances, financial situation or needs. You should consider whether it is appropriate for your circumstances. You should seek your own independent legal, financial and taxation advice before acting or relying on any of the content contained in the articles and review any relevant Product Disclosure Statement (PDS), Terms and Conditions (T&C) or Financial Services Guide (FSG).

Please consult your financial advisor, solicitor or accountant before acting on information contained in this publication.

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