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Managing debt

The D word. It can seem a bit scary, but used in the right way debt can be really useful to get the things you need. However, if your debts are becoming difficult to manage, we’ve got some great tips to help you get on top of them.  

1. The lowdown on debt

A debt is an amount of money borrowed by one party (the borrower) from another (the lender) on the condition that it’s paid back at a later date, usually with interest (what the lender charges for borrowing the money).

Debt can be in the form of home loans, personal loans, car loans, student loans, hire purchase, credit cards, store cards, buy now- pay later schemes and more.

Some debts may have the potential to improve your future prospects by increasing how much money you might be able to earn (like a student loan for tertiary study), or by increasing your assets (like a home loan to buy a house).

But debts can become a trap and get out of control – like when you spend more than you earn or borrow to buy non-essentials or things that quickly lose their value (like those trainers you just can’t live without).

It’s important that if you’re borrowing money, you’re aware of your responsibilities – like the interest rate, term of the loan (how long you have it for), fees, repayment amounts and the total cost of borrowing (the original amount plus interest and fees). This should all be provided to you by the lender. If you’re not sure about anything, don’t be afraid to ask questions – there’s no such thing as a silly question when it comes to understanding debt.

2. Taming your debt

Understand your debts

It can be tempting to put your debts in the ‘too hard basket’, especially if they’ve got out of hand. But getting them all out on the table can actually give you a liberating feeling of taking back control.

The first step is to write a list of all your debts and who they’re with. Be sure to include the repayment amount and frequency, the interest rate and any fees for each one, so you can see what they’re costing you.

Now you know what you’re dealing with, it’s time to make a plan. Your plan should include both short-term (what you can do now) and longer-term actions (what you can do to get your debt under control and keep it that way).

What you can do now

Check any upcoming payments and make sure you can at least pay the minimum repayment amount by the due date. By doing that, you’ll avoid increasing your debt through additional interest or any late payment fees (if applicable). 

If you have debts that you need to pay off in full by a set date, work backwards from that date to make sure it’s achievable. For example, if you make a purchase at a retailer with a 24 month interest free period you’ll need to work out how much you’ll need to pay regularly to ensure you pay this off within that interest free period. 

If you’re concerned about being able to make your upcoming payments, then it’s a good idea to contact your lender as soon as you can to talk through what your options may be.

Having a budget and sticking to it can also be helpful to ensure you’re not growing your debt by spending more than you’re earning.

Plan your spend 

What you can do in the longer term

First things first. What are your priorities? This will depend on your situation, for example:

  • could you prioritise paying off the debts with the highest interest rate faster, to reduce your interest costs?
  • or is there a small debt that you want to focus on paying off first to get it out of the way so, you can concentrate on reducing your bigger debts?

Remember, if you’ve got any repayments due on any debt, it’s important these are paid on time and in full, to avoid any extra interest or fees that may apply. 

How low can you go? 

Could you take advantage of lower interest rates by switching to a different product (e.g. a low interest rate credit card) or a different lender? This isn’t always possible and depends on the type of debt you have, but it’s worth finding out what your options are. You could also find out if you’ll be charged a fee for paying off your debt early. 

For example, if you have credit card debt:

  • does your lender have a lower interest rate card option that you could switch to? 
  • can you take advantage of special balance transfer offers? This is when you transfer the balance from your existing card to another lender’s card, at a special interest rate for a certain period. This special interest rate is usually significantly lower than the lender’s standard rate, so it’s the best time to repay as much as possible. But be aware, the interest rate usually reverts to the lender’s standard rate after the promotional period. 

Could consolidating debt work for you?

If you have lots of small debts – like store cards, credit cards or personal loans – it could be easier to budget for these by combining them all into one debt (for example a personal loan) with one regular repayment. 

This could also save you money on fees and total interest costs. Factors like the interest rate, term of the loan (how long you have it for) and fees could impact whether this option will save you money. So consider talking to your bank or a Financial Adviser to see if this option would be right for you. 

If this is something you’re considering, you could use the ANZ personal loan repayment calculator to give an estimate of what the repayments might look like and if it might work for your budget.

Try our Debt consolidation calculator


3. Debt repayment tips

Pay it off fast, pay less interest

Not everyone will be in a position to repay their debt faster. But if you’re able to, it makes good financial sense. Not only will you pay less interest overall, you’ll give yourself more flexibility to deal with unexpected events in the future. 

Whether it’s a credit card or a home loan, there are tips you could use to reduce the interest you pay and pay off your debt faster. 

With credit cards, aim to pay off your balance in full each month or within the interest free period so your debt isn’t expanding. If that’s not possible, pay as much as you can possibly afford. 

When getting a personal loan, shop around to find the best interest rate and terms. Make sure you’re comparing apples with apples – some lenders advertise daily or weekly interest rates whereas the majority use an annual interest rate.

If you have a home loan, the way you structure and repay it can make a big difference to how quickly you’ll pay it off and how much interest you pay over the life of your loan. If you can, paying more than the minimum – even by just a small amount – can really help.   

Whatever type of debt you’re wanting to tackle, speak to your lender to find ways to make it work for you and get on top of it.

Pay off your home loan faster 

Get credit card smart

When it comes to debt, credit cards come with some big responsibilities. To get stuck into all the details, check out ANZ Credit Card Education , an online article series looking at personal credit card interest, payments, balance transfers and more.

Credit card education

Pro tip

Pay more without even realising it!

Fortnightly or weekly payments instead of monthly payments can help you make an extra month’s worth of repayments each year without even realising it! So how does that work?

Well, if you were making monthly repayments of $1,000, you’d be repaying $12,000 a year because there are 12 months in a year. But if you switched to 26 fortnightly payments of $500 (half your monthly payment) or 52 weekly payments of $250 (a quarter of your monthly repayment), you’d be repaying $13,000 a year. That’s because different months have either 28 (29 in a leap year), 30 or 31 days, while weeks always have seven days.

Simple, huh. This could mean that you can reduce the amount of interest you pay over the life of your loan and pay it off faster. 


Well done, you're on your way to taming your debt.

You’ve just learned about managing your debt, now it's time to forge ahead with the rest of the programme.

What's up next?

Set a savings goal

Set it, to get it.

Organise your accounts 

Set, select and relax.

Invest in your future 

Smart ways to grow your wealth.

Know where you're at

Get your financial wellbeing score.

Plan your spend 

Yes, it’s a budget. But not as you know it.

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The information above is for information purposes only.  Its content is intended to be of a general nature, does not take into account your financial situation or goals, and is not a personalised financial adviser service under the Financial Advisers Act 2008. It is recommended you seek advice from a financial adviser which takes into account your individual circumstances before you acquire a financial product.

The ANZ Debt consolidation savings calculator provides an estimate/illustration only and is based on the accuracy of the limited financial information provided by you. Results are based on amortised scheduled repayments with a constant interest rate for the term of the loan. This is not an offer of finance by ANZ and a full lending application will need to be completed.

The information stored in this calculator will be passed between calculators and our online application form for your convenience, but will not be stored once this session is complete unless you choose the save for later option during your session.

ANZ Personal Loans are subject to our current lending criteria, terms, conditions, applicable fees and interest rates.