Dealing with debt

Dealing with debt is never easy and it can be hard to know what to do. To try and prevent getting yourself into heavier debt, you should think carefully before signing up for a credit or store cardDebit cards and lay-bys are often better options. There are ways you can manage debt, and the stress that comes with being in debt.

This can help with:

  • Dealing with credit card debt
  • Making borrowing decisions 
  • Helping get out of debt 
  • Adjusting to independence
Girl sitting on the floor with black converse

Credit and store cards

No-one enjoys being in debt. Sometimes it's unavoidable, and you'll have to decide for yourself when you think you should borrow money. It's good to have all the information and make a decision based on the facts, not on how much you want, say, a new TV.

Credit Cards

Credit cards can look like a good option to get something you can't afford up-front. But they usually charge heaps of interest, then charge heaps of interest on the interest they've already charged. Long story short: you pay far more, for far longer, than if you'd just saved up for something. If you start to get behind in payments, they'll often slug you with late fees as well.

Applying for a credit card -

If you do decide to apply for a credit card, you'll need to give them heaps of info about your income, assets and expenses. It'll also have terms and conditions with info about interest, fees, repayments and limits. Read it carefully, even though the print is tiny. It'll normally take a couple of days for the credit card company or bank to decide whether they'll give you a card.

Store cards

Store cards are like credit cards that charge even more interest, and they only work in one place. They're pretty crap options for borrowing money because they tend to prevent you from shopping around.

Debit cards and lay-by

Debit cards

Debit cards are a better option than credit cards for a lot of people. You can still spend money over the internet, but the cash comes directly from your account, and no-one charges you huge amounts of interest or imposes massive fees. 


A lot of shops offer lay-bys that let you put stuff aside and pay for it over a short time. You have to keep up minimum payments and stick to the time period, or you'll lose some of what you've paid, but it can be a good option, because there's no interest involved.

Avoiding card debt

  • Make a budget before you start racking up card debt so you know how much you can afford to pay off
  • Work out the limit you think you can afford – it's probably much lower than the bank's calculation 
  • Get a card with what you need – if you can pay it off fast, go for an interest-free period. If the debt will be sitting there a while, go low-interest
  • Keep an eye on what you spend – it's too easy to say “I'll worry about it later”
  • Don't get cash out on your credit card – the interest is a killer

Managing credit card debt

  • The more you pay, the less interest you'll be charged in future, so knock over as much as you can afford
  • If it's too hard to avoid the temptation, take the card out of your wallet. If you want to pay it off and get rid of it, you could even cut it up and throw it away
  • If you can avoid it, don't use your credit card to pay your credit card bill – you're just setting yourself up for more interest

If you're in over your head

  • Ring whoever gave you the credit card and explain your situation. They might be able to set up a payment schedule you can manage
  • Talk to a financial counsellor about your options. They deal with this all the time, and they can probably help you. You can find that at a lot of local councils, TAFEs and unis 
  • Check with the Office of Fair Trading in your state or territory to see if you're eligible for credit relief 
  • Get tools to manage the stress of this (really stressful!) situation. Check out our dealing with stress and relaxation fact sheets.

What can I do now?

  • Use a budgeting app to track your expenses.
  • Talk to your bank about what options you have when it comes to paying back debt.
  • If the stress is overwhelming you, talk to a professional.
Last reviewed: 26 August, 2015
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