Managing Debt During Uncertain Times

Managing debt
during uncertain times

Are you being weighed down by the burden of debt? Here are some steps to take and options to explore to help lighten the load.

With Australia having the second highest level of household debt in the world1 and 14,482,8772 credit cards in circulation as at March 2020, it’s no wonder many are keen to get back to work – we’ve got debts to pay!

Many will still face unemployment in the short-term and the burden of debt will weigh heavily. There are some steps to take and options to explore to help lighten the load.

Managing your mortgage

The best option is to ask your bank about reviewing your interest rate. As a loyal customer, they might be able to reduce it and this will reduce your repayments today and in the future.

There are other options to help you in the short term but tread carefully as these generally mean you’ll pay more in the long term, so only do it if you really need to. Some of these options include:

  • Take up the repayment holidays of up to six months that many banks are offering.
  • Ask about increasing the term of your loan, which has the effect of reducing your repayments.
  • Look into switching to an Interest-Only loan.
Rent relief

New South Wales put a moratorium on evictions for 60 days from 15 April, followed by another six-month moratorium. Renters have been encouraged to negotiate a reduction with their landlord. Where a resolution cannot be found, parties are able to have their dispute reviewed by the Department of Fair Trading.

There are guidelines about how they will look at the lease agreement. You can find out more information about your rights and the guidelines through the Tenants Union of NSW.

Keep your energy up

All the energy providers have announced payment extensions and repayment plans and promises to withhold disconnections until the end of July. With more people spending more time at home and winter starting, bills will likely be higher, so if you have trouble paying your bill, talk to them. 

The NSW Government funds a few rebate programs for those struggling to pay their electricity and gas bills. There’s an Energy Accounts Payments Assistance scheme and a Seniors Energy Rebate available. There’s more information here or you can call 13 77 88.

Energy Networks Australia have also announced a suspension of network charges for small and medium sized businesses.

Give yourself credit

Find out what relief your bank is offering for their credit cards. Many credit card providers have responded by reducing minimum repayments, deferring repayments for three to six months, and suspending late payment fees. Others have drastically reduced their interest rates.

Be aware that if you defer payments or only make reduced minimum repayments, you’ll find your debt doesn’t go away and actually grows.

Rank your debts

Set out your debts and interest rates. Firstly, you’ll see they’re just numbers, not emotional statements, and reorganising those numbers will help you reduce them.

Rank them into the ones with the highest interest rate first and lowest rate last. How much are you repaying each month to stay on top of them? Can you roll your highest interest rate debt into the lowest rate one?

Look into Zero-Interest credit cards which offer a full balance transfer. You could transfer all those debts into one card with no interest for 6 to 12 months. They do charge relatively high interest rates when the Zero-Interest rate term expires and if you haven’t repaid the full amount, you will be hit with the high interest on any amount outstanding. This is a short-term relief tactic only.

Roll them under one roof

Your home loan is more useful than you realise. It’s a debt, but the property you’ve bought is probably increasing in value (which you could also borrow against). With rates at historical lows, it may be your cheapest debt right now and could be one of the best ways to reduce your overall debt.

If you roll all your other debts into your home loan, you could:

  • reduce the interest rate you’re paying
  • increase the amount of your home loan
  • turn your short -term debts into long-term ones, and
  • potentially be paying more overall in dollar terms than you would have beforehand.

The trick here is to increase your home loan repayments by the amounts you were paying on your credit cards over the next 12 to 24 months (whatever your original repayment plan was). This means you could be paying less in interest than what you had originally committed to and paying off your debts at the same time.

Look after yourself

Remember, your health is a priority too. Stress may harm you more than any debt will, and many successful people have come through debt-ridden times. It’s in everyone’s interest you don’t default, especially on a mortgage, so don’t be backward about asking for help. Staying healthy means you’ll be ready when new opportunities present themselves and fit enough to tackle them.

Of course, all these measures are suggestions only and cannot take into account your own personal circumstances. This situation is impacting everyone differently. The main similarity is that taking positive action is the way ahead.

If you’re not sure where to start, try our online learning modules at

1 Source:
2 Source: Reserve Bank of Australia, C1.1 Credit and Charge Cards – Original Series – Aggregate Data