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3 ways to quickly pay down credit card debt

It’s that time of year where present giving is on everyone’s mind. But many Australians will reach for the credit card to pay for some of the presents and other festive items.

Credit cards are great business for Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB). The banks get to earn high interest rates in today’s environment of very low rates.

So it’s a good idea to try to pay off that credit card debt as quickly as possible after the Christmas festivities have finished. Here are some ideas of what you could do:

Sell items 

Most Aussies will have items sitting around their house that could be sold for money but is just collecting dust. It could be anything: clothes, old devices (that have been appropriately wiped clean), furniture and so on.

There are plenty of places that you can sell on or just research to see what kind of things can be sold. Facebook marketplace, Gumtree, eBay etc. Or you could just be old school and do a garage sale. Every dollar counts.

You could even be cheeky and try to return any Christmas gifts that are store-bought that you don’t want. Returning Christmas gifts is not a great look, but it’s better than having bad debt having over your head. You can contact the National Debt Helpline for free that can help you with hardship, if you’re in hardship you may be able to access some of your super to pay off the debt. 

Sell shares 

As someone who loves shares I wouldn’t initially like the idea of selling assets. But it’s very unlikely that your assets are earning 15% to 20% after tax a year.

It’s much better to pay off high-interest liabilities and invest afterwards, rather than earn lower returns from shares which may only produce an average return of 10% per annum.

I’m assuming most people reading a website about shares has some shares they may be able to sell. 

Work overtime or make other income 

Maybe it’s easier for you to just work overtime at your job to pay off the debt. That’s fine if that’s what you want to do and you have the work flexibility to do that. Depending on how much debt you’ve built up, you may need to get an actual second job to pay off that debt – every month of interest accrued is painful for your finances.

It could also be possible just to do some online surveys whilst you watch TV at night, although that’s a much slower plan and won’t earn you much per hour.

Foolish takeaway 

The banks already generate massive profits, you don’t need to make them any more profitable if you can help it. Paying down high interest debt like credit cards is definitely a good choice.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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