December 2009 was the largest monthly spend by Australians in history, increasing the average credit card balance to $3,250. The majority of Australians are well aware of the risks involved in leaving credit card debt unpaid. A popular solution to credit card debt is to consolidate your debts into one loan. Aussies in debt is a growing concern, if you are struggling with debt try consolidation.
Over the recent holiday period, Australians demonstrated their confidence that we are coming out of the Global Financial Crisis (GFC) fairly unscathed. This was evident by the December spending peak of $22.02 billion, which was a vast jump of $2 billion from November.
On the average debt of $3,250, credit card spenders making minimum repayments of $100 will take years to repay their balance. However, Australians can save themselves on interest repayments by comparing rates to get the best deal. Another popular credit card debt solution is a consolidation loan. They are perfect for those who need to consolidate multiple credit cards, store card debt and personal loans and can drastically reduce the amount of interest you pay.
Aussies in Credit Card Debt
Additional to Australians increased credit card debt, last week saw the fourth interest rate rise by the Reserved Bank of Australia (RBA) since last October. Rate rises this soon after the record breaking spending will no doubt affect the way borrowers make repayments on both credit cards and home loans.
The RBA’s 0.25% increase means homeowners with an average mortgage of $300,000 will pay an extra $47.41 a month. It may not sound like much, but almost $50 to those who are most vulnerable in the housing market may well mean they will now struggle to make repayments.
Australians who stretched themselves to be able to take advantage of the boosted first home buyers grant in 2009 and those suffering with a crippling mortgage may well find the year ahead to be as uncertain as the year of the GFC. The latest RBA figures show total housing debt hit $910.01 billion in December, up by 17% on the previous year. Australians’ total housing debt is set to reach $1 trillion within a year.
On the flip side, if people are forced to sell, it may mean some bargain real estate buys are around for anyone who is lucky enough to be cashed up. But the real cost in human terms will be a trail of bad debts and shattered dreams.
It’s important to note that changes to the official cash rate can present an opportunity for borrowers to get a better deal on their home loan. For example, as a borrower you could look into moving to a different loan product to reduce mortgage costs, but only if the benefits outweigh the fees involved.
Refinancing essentially reduces the amount of interest you pay and often allows you to pay off other debts simultaneously to your home loan, such as personal loans or credit card debt. This is done by switching to a loan with a lower interest rate when you refinance.
Australian Lending Centre has a range of products designed to help people combat the effects of rising interest rates and to get out of debt – why not take a look at how much money you can save by using our home loan repayment calculator? Otherwise, you can get a free debt assessment with no credit check by spending one minute filling out the ‘express enquiry’ form on the right or by phoning 1300 138 188 today.