Making Holiday Debt Stress-Free


The Holidays bring so much to our lives. Rest, relaxation, family, joy, presents, plum pudding and, sometimes, debt. Letting loose on vacation often means getting loose with our wallets – especially when visiting places that we may never see again. Back home, a return to daily life (and our bank statements) brings us back to reality.

Credit Woes

The problem is that credit card interest rates are quite high in comparison to other types of debt. That’s why the standard advice is to pay your balance off – keeping within the interest free period most credit cards offer.

While rapid repayments are ideal, they’re not the norm. If they were, the Herald Sun wouldn’t have reported that Australians pay $12.3 million a day on credit card interest alone.

The most common credit card interest rate is over 21 %. A return from abroad or interstate after the holidays often leaves us recharged in some ways, drained in others. It’s easy to settle back into the work/life routine and settle for paying the monthly minimum.

When making minimum monthly payments becomes a pattern, interest becomes an added expense that’s impossible to avoid.

Interest Rising

For a sense of how interest stacks up, check out the difference in additional cost created by interest on a $10,000 credit card debt being paid off at $250.00 per month:

Interest Rate Time to Pay Off Interest Cost
9.9% 4 years, 1 month $2,186.00
14.99% 4 years, 8 months $3,945.00
21.99% 6 years, 1 month $8,180.00


We all knew that higher rates equal higher costs, but seeing those additional costs laid out shows us how extending a trip for a week can add years to repayments – even at comparatively low interest rates.

What about smaller debts?

The minimum payment trap applies to lesser credit debts as well, especially since smaller numbers often make paying the minimum feel like a comfortable choice.

Paying a minimum of 3% on $3,000 will see you paying $90 per month for 4 years, 3 months. That’s $1,542 just in interest going by the common rate of 21%. If your minimum is less, you pay more. $60 per month more than doubles both the time and interest charges!

Curb, Cut & Convert

When we can’t pay off the balance within the interest free period, the next best course of action is to:

  • Curb spending: a key to managing financial stress is changing bad habits.
  • Cut the card: this doesn’t have to be literal – just be sure to reserve credit only for rainy day needs.
  • Convert the debt: if it works best for you, move that debt to a more manageable, sensible format.

Consolidation & Refinancing

Debt Consolidation and Mortgage Refinancing are great options for anyone strained by credit card or holiday debt.

The trick is to use a good mortgage broker, not go to a bank directly. Brokers are committed to clients, focused on saving you money – and they’re free.

Our Melbourne mortgage brokers work with our clients to determine the best course of action for their unique circumstance. The mortgage broker’s process is straightforward and we make it simple:

  • Meet with the client to discuss requirements and objectives – collecting all the information needed to assess their situation and make the recommendation that achieves their goals
  • Recommend the right product and loan structure for the client that saves them interest
  • Prepare the required short form applications for the client
  • Manage the lender through the assessment stage, keeping the client updated throughout the process
  • When the loan is approved, sign the new mortgage documents with the client
  • Ensure the new lender communicates to the existing lender for the discharge and takeover of the mortgage – and the process is complete!

Take Charge Now

Do you have a debt you’d like to consolidate or refinance?

Contact Melcorp Finance today for a complimentary financial health check.


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