Skip to Main Content
Resource Hub
Newsroom
Blog

Pay Off Your Credit Card: Effective Methods of Managing Debt

Elsa Markula
Arca
CEO
Published on: 7 Aug 2026

If you owe money on your credit card, you're far from alone.   

Australians hold around 14.7 million credit cards and owe roughly $33 billion on them, with almost $18 billion accruing interest at an average rate of over 18% per annum, according to the Reserve Bank of Australia. 

Credit card debt can feel overwhelming, especially when interest keeps growing and the minimum repayment barely moves the balance.  

The good news is that with a clear plan and a few proven methods, you can take back control.  

This guide walks through practical, Australian-specific ways to pay off your credit card faster and pay less interest along the way. 

Table of contents:

 

Create a financial plan to manage credit card debt 

Managing credit card debt comes down to a simple three-part plan:  

  1. Know exactly what you owe.  
  2. Set a monthly repayment you can realistically stick to. 
  3. Reduce the interest you're paying while you clear the balance. 

Understand your current balance and repayments 

Start by tallying up what you owe. Check your latest credit card statement (or log in to your bank app) and note the balance, interest rate, minimum repayment, and due date for each card.  

It helps to see everything in one place.  

A simple Excel or Google spreadsheet (or even just a piece of paper and a pen) gives you a clear picture of your total debt and shows where the most expensive interest is building up (recommendation: one row per card, with columns for balance, rate and minimum repayment).  

Reviewing a few months of transactions also reveals roughly how much interest you're paying each billing cycle. 

Set realistic repayment goals 

Once you know the numbers, work out how much you can put towards your cards’ monthly repayments. Moneysmart's free budget planner can help you find room in your spending. 

Try to pay more than the minimum whenever you can. However, if you’re short of cash and the minimum is all you can afford in a particular month, it’s still important to make that payment. 

The key is not to base your long-term strategy on minimum payments (they are not designed for that purpose). Paying the minimum can mean it takes much longer to pay off the debt and costs you more in interest.

If you’re worried about how financial hardship might affect your credit report, take a look at this page. 

An illustrative example. 

Take a $4,000 balance at around 20% p.a. Paying only the minimum (the greater of 2% or $30) could take more than 30 years and cost over $13,000 in interest. 

Paying a fixed $200 a month instead clears the same balance in about two years, for under $1,000 in interest.  

These figures are illustrative (your card's rate, fees and minimum payment will differ). To run your own numbers, use Moneysmart's credit card calculator.

Strategies to reduce interest costs 

  1. First, stop adding new purchases while you pay down the balance, so your repayments actually reduce what you owe rather than covering fresh spending.
  2. Next, see if you can get a better deal. Interest rates between cards can vary by more than 10% per annum, so it may be worth moving your debt to a lower-rate product. One option is a balance transfer, where you shift your balance to another credit card with a low or 0% introductory rate, usually for 6 to 24 months. Balance transfers can work well, but check the details, including any fees that apply.
  3. Finally, reduce the temptation to overspend by asking your bank to lower your credit limit, and consider cancelling each card as you pay it off — perhaps keeping just one for emergencies. 

Visit our financial hardship assistance page to learn more about your options.

 

Credit card debt payoff strategies: avalanche vs snowball method 

If you have more than one card, two popular methods help you decide which order to tackle them in. With both, you keep making at least the minimum repayment on every card and put any spare money towards one target card. 

What is the debt snowball method? 

The snowball method means paying off the card with the smallest balance first. Clearing a card quickly gives you a motivating win and frees up cash to roll into the next smallest debt. 

What is the debt avalanche method? 

The avalanche method means paying off the card with the highest interest rate first. It usually saves you the most money overall, because you're attacking your most expensive debt before it grows. 

Avalanche vs snowball strategies 

Method How it works Best for
Snowball Pay off the smallest balance first, then the next smallest. Staying motivated with quick, visible wins.
Avalanche Pay off the highest interest rate first, then the next highest.  Paying the least interest over the whole journey.

The best method is the one you'll stick with. If staying motivated is your challenge, start with the snowball; if saving the most money matters most, choose the avalanche. 

 

Using tools, apps and resources for better credit card management 

You don't have to do this alone. As mentioned, Moneysmart's free budget planner and credit card calculator help you set a realistic plan and see your payoff date.  

Your banking app can send due-date alerts and let you set up a direct debit, so you never miss a payment (paying on time avoids late fees and helps protect your credit score).  

Remember, don’t underestimate the power of an Excel tracker (it keeps your balances and progress in one place).  

And it's worth phoning your bank to ask for a lower interest rate; a single call can save you money. 

 

Identifying signs of financial stress and how to find support 

Sometimes the problem runs deeper than budgeting. Common signs of financial stress include only ever making minimum repayments, using another credit card to pay off the first, taking cash advances to cover everyday costs, or missing repayments and bills. 

If you need support, CreditSmart's helpful services page lists free resources, including the National Debt Helpline (1800 007 007) and financial counselling services.  

Acting early stops a small money problem from becoming a bigger one. 

 

Frequently asked questions 

What is the fastest way to pay off a credit card? 

Pay as much as you can above the minimum, stop using the card, and target your highest-interest debt first (the avalanche method).  

A balance transfer to a low or 0% card can speed things up, if you clear it before the introductory period ends. 

Is the avalanche or snowball method better? 

Neither is universally better. The avalanche method saves the most interest, while the snowball method gives quicker motivational wins. Choose the one you're most likely to stick with. 

Can I use another credit card to pay off debt? 

Through a balance transfer, yes (moving your balance to a card with a lower or 0% rate can help, as long as you understand the fees, the revert rate and the risk of losing the rate if you miss a payment). Using one card to pay for another without a plan usually just shifts the debt around. 

What should I do if I can't make my repayments? 

Contact your bank or credit provider as soon as possible, they may be able to help through a financial hardship arrangement. You can also get free, confidential help from a financial counsellor via the National Debt Helpline on 1800 007 007.

 

Sources:

Digital Agency: SGY