Credit card debt crisis threatens Australians amid looming financial hangover

February is the toughest month of the year for some households, as they deal with the combined hit of credit card bills and New Year’s Eve expenses.

Keeping tabs on your bills and finances can be tough at the best of times, but according to financial experts, February can be a particularly tough month.

And if you celebrated a little too hard in December and January, you could be in for a financial hangover in February worse than the consequences of all your holiday parties combined.

It’s a scenario Molly Benjamin, financial educator and founder of the Ladies Finance Club, knows well.

“People enjoyed the fun and celebrated times and then the reality hits. Then they realize their increased spending cannot continue and must be repaid,” she told

“It’s quite common for people to think that if I can get through December and January, I’ll start paying for everything. Next, I’m going to be very strict on my budget. However, now there are also additional stresses that we are seeing from COVID, as well as back-to-school and seasonal costs.


The early months of the year also tend to be when banks offer enticing low-rate credit cards and balance transfer offers.

However, while a six- to 24-month zero-rate balance transfer offer — where you transfer debt from an existing credit card to a new one — might sound like a great idea, keep in mind that it often results in much higher interest. rate once the promotional period has expired.

“It’s great if you have a plan and you can get yourself out of that debt faster, but what we often find is that people aren’t able to make that plan and they end up with a higher rate, which can lead to more stress and poor credit,” she says.


If you’ve found yourself counting your dollars and drastically cutting your budget, Ms Benjamin says it’s definitely not too late to “dust off your New Year’s resolutions and start afresh.” However, if you need help getting back on track, she shares her top tips for reorganizing your finances.

1. Stop spending with your card

If you’re struggling with credit card debt or buy-now-pay-later programs, the first step is to stop the cycle.

“Literally, cut it. Melt it, put it on the fire,” says Benjamin.

2. Automation is key

Whether it’s automating your bills or your savings, this step ensures that your money is organized without you having to think twice.

“When your money arrives, you know the money for your bills is being set aside,” she says.

3. Build an emergency fund

“Deposit $1,000 into a no-fee account that you accumulate for up to three to six months of spending and, as the name suggests, only touch it in an emergency – like if the car breaks down , my tooth got chipped,” she says.

“That means you don’t have to put expenses on a credit card and you’ll avoid going into further debt.”

RELATED: How much money should you have in your emergency fund?

4. Focus on paying off your debt

For this, Ms. Benjamin recommends two methods: the snowball method or the avalanche method. The snowball method consists of paying off your debts from the smallest amount to the largest (while paying the minimum repayments for each).

The avalanche method gives priority to debts that generate the highest interest rates, regardless of their amount.

Although she says both techniques work, she prefers the snowball method which increases your “small wins”.

“It’s about creating behavioral change and getting those little wins quickly that translate into that dose of dopamine.”

5. Write down your goals

This will help you solidify your “short, medium and long-term financial goals” to help you stay on track, says Benjamin. She also says it can be helpful for people to audibly read their weekly or even daily goals to stay motivated.

“I find that with our members, a lot of them don’t have goals. They didn’t actually sit down and ask ‘what do I really want?’ and if you don’t know what you want, you can’t create a plan to achieve them,” she says.

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