A guide to managing debt

June 22nd 2020 | Categories: Debt Management |

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Your options around managing will vary depending on the type of debts you have, the interest rates attached to the debts and your current financial position. It’s important to review your debts regularly to ensure your debt is still working in your favour and you’re paying the lowest interest amount available to you. You also need to consider your long-term repayment plan; which debts should you pay off first? Should you consolidate debts? How can you pay your debts off faster?


Understand how a financial adviser can support you with your need for financial security. Get in touch.

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Below we discuss types of debts and how to effectively manage each one.


Student Loans:

Australian residents are fortunate to have the ability to use the government HECC/HELP student debt program to pay for university or higher education. The benefit of this kind of debt is that not only does it pave the path for a future career, but it also doesn’t have interest applied. It is, however, indexed annually according to the CPI (Consumer Price Index) which sits at an average of 1.8%. This means if you aren’t making repayments greater than this amount it will grow and compound over time. There is also a hefty 25% loan fee which is added to undergraduate degrees.

You can read our full article on HECS debt below:


Credit Card Debt:

There are currently over 16 million credit card accounts in Australia with a monthly average debt of 30billion. Credit cards have on average a much higher interest compared to other loan types with an average interest rate of 13.76%.  They have also been the cause of debts spiralling out of control for many Australians. Credit cards are considered a bad debt and often result in many small non-essential purchases adding up into one big debt that attracts high interest. There are benefits however that come with some credit cards such as earning travel or loyalty points. Usually, if you repay the purchase amount within 30 days you won’t be charged the full interest. The best way to make the most of your credit card is to repay the purchase amount straight back from a savings account, this will enable you to claim all the points and perks and not be charged interest.

Ideally, if you do have credit card debt you should focus on paying this off first as it accumulates the highest interest and will cost you the most in the long run.

You can read our full article on credit card debt trends and comparison here.


Personal Loans:

The interest rates on personal loans currently sit at an average of 14.41% and 12.42% for fixed personal loans. You should have a strategy towards repaying these loans as quickly as possible to reduce overall fees and interest or consider refinancing.

You may be interested in our articles:

Spotlight on personal loans, trends and ways to repay your loan faster.



Home loans otherwise known as a mortgage are considered good debt as they are helping you accumulate long term wealth. With interest rates at a record low of 0.25%, they are also more affordable than ever. If you are currently paying more than 3% you should consider refinancing. While interest rates are low it is advantageous to maximise additional repayments on your loans. You could also consider leveraging equity through debt recycling. If you are approaching retirement, paying down your mortgage with a lump sum from your super may be a good option for you.

You may be interested to read more on:


Buy Now Pay Later (BNPL):

This is the newest kind of debt on the block, with companies like Afterpay and ZipPay allowing you to make a purchase, receive the item straight away and repay it in fortnightly instalments. Although there is not always interest in the loan or an interest-free period, it does pose an issue for those who are potentially spending more than they could afford. As this is considered a liability like any other debt, it may impact your borrowing capability and capacity.

You can read our full article on the rise of BNPL here.


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What to do if your debt is getting you down

Finances are the leading cause of stress for Australians, with people often buying more than they can afford and ending up with unmanageable debt. Taking on any kind of debt is something that should carefully be considered, ask yourself questions like “will future you be happy paying for this purchase in 2 or 3 years’ time or even in a months’ time?” and “is this a want or a need?”.

You can read more about managing debt stress here.

If you find your debts are spiralling out of control or you’re using your credit card on necessary purchases here are some tips to help you get back on track:


Utilise Low-Interest Rates

With interest rates at an all-time low, now is the time to put an effective strategy in place to manage your debts.

You can read more on current interest rates below:


If you’re serious about retiring debt free we encourage you to speak to a financial adviser to ensure your finances and assets are working in the best way possible for you. They will be able to review your entire financial situation, provide you with a clear plan to become debt-free and keep you on track towards achieving your goals dreams.


Speak to us today to find out how we can help you.

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What you need to know

This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.