While many of us are thankful to have access to credit when the cash runs out, Aussies’ “pay you later mate” attitude could be stifling other financial goals, including reducing capacity to borrow for a home loan.
The average debt per Aussie credit card is at a two-year high of $1,990, according to the finder.com.au research.
Graham Cooke, Insights Manager at finder.com.au told propertyupdate.com.au the amount of credit available to Australians is higher than ever.
“Although a big credit limit may be reassuring in case of an emergency, try not to rely on it for everyday purchases,” he said. Also, remember that a higher credit limit can adversely affect your borrowing capacity when applying for other financial products.”
So if you are wanting to reduce the credit card debt and increase your borrowing capacity, what are your options?
Cooke recommends taking advantage of the time-limited interest free offers.
“If you’re struggling to pay off your plastic debt, consider a 0% balance transfer card as this allows you to move your balance across and pay no interest for a given timeframe — usually for one year or more,“ he said.
It also pays to check your credit score. We offered some tips to do just that earlier this year. But don’t take our word for it, talk to your financial advisor or a mortgage broker to make sure you know where you stand on the path to your property goals.