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I’m drowning in credit card debt

This fact sheet is for information only. It is recommended that you get legal advice about your situation.


Kylie has five credit cards. Kylie is stressed because all of her credit cards are maxed out. She is over the limit on two of the cards and is getting called almost everyday by two different banks demanding repayments. Kylie tries to make repayments but with all the late fees being charged she is getting nowhere.


It is very easy to get overcommitted with credit card debt. This fact sheet will give you some ways to tackle your credit card debt. This fact sheet is only for people who are struggling with debt. This fact sheet is NOT for you if:

  • You are in financial hardship due to a significant reduction in income (for example, unemployment, illness etc.) See Fact sheet: Financial Hardship
  • You were given a credit card limit you could not reasonably afford at the time the credit card and/or limit increase was granted. If you think this might apply to you – get Legal Advice as the loan may be arguably unjust or unsuitable.




You need to be committed to trying to reducing your credit card debt. This may mean reviewing your budget and cutting down on unnecessary  expenses and stop using your credit cards (including direct debts to your credit cards if possible).

It also means cancelling all of your credit cards except for one. That credit card should have a limit you can manage. It should also be the credit card you want to keep. As you repay this credit card reduce the credit limit until you reach the credit limit that you can manage.


If at all possible make the minimum repayments on all of your credit cards.

REMEMBER: Credit card debt is unsecured debt so it is not as high a priority debt as a home loan or car loan. Get urgent advice if you are having trouble paying a home loan or car loan.


If you cannot make the minimum repayment on all of your credit cards then you should make the minimum repayments on as many credit cards as possible. This means that you can concentrate on making a repayment arrangement on one or two credit cards instead of every credit card.

The main difficulty with juggling credit card debt is trying to deal with so many people demanding money. This is why the best strategy is to pay the minimum repayments on as many credit cards as possible so those credit cards are in order. Then you should concentrate on negotiating a repayment arrangement on the other credit cards.

When you ask for a repayment arrangement:

  • Say you are in financial hardship;
  • Ask for no interest or fees to be charged for three months while you try and catch up;
  • Offer the amount that you can afford to pay.

Many lenders have an obligation to try to work with you while you are in financial hardship. Even though the lender does not have to make an arrangement there is a good chance they will agree to at least an interim arrangement.

You should use the three months to get the credit card back in order. If the lender won’t agree to an arrangement you need to keep persevering and asking but continue to make the repayment that you can afford.

Some lenders will offer you a complete “moratorium” on your card for three months. It is best that you keep paying whatever you can afford, otherwise you will find yourself in the exactly the same position in  three months time and the lender won’t necessarily be so helpful the next time you ask.


By this step you should now be making at least the minimum repayments on all of your credit cards. If so, well done! If not, you need to get some more help:

REMEMBER: Unsecured debt like credit cards may not be your highest priority debt, but it can cause you serious problems in the long run if the lender takes you to court. Don’t ignore the problem. If you can’t reach agreement with the lender – get some help.


You have two main options now on how to proceed to reduce your credit card debt:

  • Option 1 – Begin making extra payments to the credit card with the smallest balance.
  • Option 2 – Begin making extra payments to the credit card with the highest interest.

Option 1 is recommended because it will be the easiest balance to pay off. Paying off a card debt completely gives you a great sense of satisfaction and the motivation to continue. If your lowest balance is the highest interest credit card – even better!

Once you pay off one credit card those repayments you were making to the credit card that has been paid off can now be used to pay the credit card with the next lowest balance. You continue with this process until all the debt is repaid.

REMEMBER: This process is slow to start but then moves very fast once you pay off the first credit card. STAY WITH IT!


See Fact Sheet: Getting Help for a list of additional resources.

Last Updated: February 2017