Credit Cards

Personal credit cards are widely available and are a convenient way to pay your bills. They’re risky though because you’re spending money you might not actually have.

If you’re struggling to make repayments on your credit card, follow these steps.

Steps to take if you’re struggling with credit card debt


Work out what you can afford to pay

If you’re struggling to pay back money you owe, the first thing to do is to work out what you can actually afford to pay by doing a simple budget. How to work out what you can afford to pay.

If you can afford to pay something
Start paying the amount you can afford and get in touch with your creditor straight away to put a repayment agreement in place.

If you can’t afford to pay anything
Call us on 1800 007 007 straight away for advice.


Contact your credit card lender

Get in touch with your lender’s hardship department. Tell them you’re in financial hardship and why you’re struggling to make repayments.

In most cases the credit provider or finance company will help you with a repayment arrangement based on what you can afford. They may be able to:

  • Stop charging you interest
  • Change the payment to an amount you can afford
  • Give you a few months of making no payments so you can get back on your feet
  • Waive your debt if you are experiencing extreme hardship or have an exceptional circumstance

Be prepared before you make contact. Read about how to negotiate payment terms.

If you get a reduced repayment arrangement, it means:

  • Your payments will be lower, but it will take longer to repay the debt.
  • The overall cost of a loan may therefore be greater.
  • You’ll still have to pay off your debt even if your lender cancels your credit card

Remember, if you’re successful in coming to an arrangement, you need to keep to that arrangement. If you can’t afford the repayments ring your lender and change the arrangement. Your lender may cancel your credit card at any time and is likely to do so if you’re behind in repayments.


If you only pay the minimum, your debt will keep growing!

For example, if you owe $5,000 on your credit card at an interest rate of 18% and you only make the minimum payments, it will take you 33 years to clear the debt with total repayments of $17,181. But if you paid $246 per month, you would clear the debt in two years and pay $5,902 in interest.

Useful tools to help you work out what you can afford are MoneySmart’s Budget Planner and Credit Card Calculator.


Plan to reduce your overall credit debt

If you are spending more than you earn and using your credit card for purchases, the high interest rates and other charges means the debt can build up quickly. The MoneySmart website has an easy-to-use budgeting tool to help you keep track of your spending. Other simple things you can do are:

  • Avoid using your credit card/s for any more purchases, except emergencies
  • Keep up your credit card repayments and pay on time
  • Pay the debt with the highest interest rate first or the smallest debt first
  • Close each credit card account as you pay it off
  • Lower your credit card limit


Money Smart offers more tips on how to pay off multiple credit cards.


Speak to one of our financial counsellors

If your problem still hasn’t been solved, or you’re feeling overwhelmed, call us on 1800 007 007 to speak with one of our financial counsellors.

What should I do if?

I get a default notice

A default notice is a letter formally notifying you that you are in arrears.

  • It’s the first step in a creditor taking recovery action against you
  • It normally gives you at least 30 days to pay the arrears
  • In addition to the arrears, you will also need to pay your regular payment within the 30 days

creditor won’t usually issue a default notice if you’re being assisted by their hardship department. So if you can’t pay because of financial hardship, contact your creditor immediately to discuss hardship options and get the default notice cancelled.

I still don't pay

If you do nothing before the expiry date of the default notice, your debt will be ‘accelerated’. This means you owe the whole debt, not just the payment you are behind on.

Also, the creditor may decide at this point to start legal action against you. If they get a judgment from a court, they can get a court order to have money taken from your wage or take assets such as your car, boat or house. If you’re in this situation, contact us on 1800 007 007.



If you were given a credit card limit you could not reasonably afford at the time the credit card and/or limit increase was granted, the loan may be arguably unjust or unsuitable.

Credit card debt is covered by the National Consumer Credit Protection Act.

This means:

  • If you were given a credit card limit you could not reasonably afford at the time the credit card and/or limit increase was granted, the loan may be arguably unjust or unsuitable
  • Credit providers are legally required to complete a number of steps if they’re trying to commence legal proceedings
  • Credit providers must act reasonably in dealing with your issues. If you are not satisfied, you have a right to dispute resolution

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