Q. I would love to be able to live without a credit card, but is it possible? I currently owe about $2,000 on my credit card and it just sits there and never seems to reduce.

A. Unfortunately, you are not alone. Many Australians are currently stuck with credit card and personal loan debt that they can’t get rid of. However, the good news is that you can live without credit; it just requires more organisation and planning. 

Firstly, you need to create an emergency fund. Many people often resort to using the credit card when something unexpected happens (such as an accident or the car breaks down). But then they are stuck with repaying the debt. You only need to add a small amount every week to your emergency fund and it will quickly add up (especially if you keep the money in a high interest savings account).

Secondly, if you don’t like carrying around cash or you are an avid online shopper, a debit card is a great solution. You can still pay using your card, however, as the money is coming directly out of your account, you are only spending money that you have. 

Thirdly, with the right planning and budgeting, you can actually earn interest instead of paying it. Credit cards have extremely high interest rates and usually the minimum repayment amount only covers the interest and a small portion of the amount owing. However, if you were able to put this money into a high interest savings account instead, imagine how much you could save over 6 months, a year or even 5 years. 


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