What is the credit card roundabout?
It starts innocently. A big month lands on the card, you pay the minimum, and next month there's a little more. Before long, you're using one card to cover another, or relying on credit for everyday spending. The balance keeps circling and never really shrinks. That's the roundabout.
Signs you might be on it
- You only ever pay the minimum amount.
- Your balance is higher now than it was six months ago.
- You've moved a balance to a new card and the old one is filling up again.
- You use credit for groceries or bills because your account runs dry before pay day.
- You're not sure what interest rate you're paying.
Why minimum repayments keep you circling
Minimum repayments are often a small percentage of the balance. With interest charged on the rest, most of a minimum payment can go to interest rather than the amount you owe. Your statement includes a minimum repayment warning that shows how long it would take to clear the balance paying only the minimum. It's often an eye-opener.
How to take the next exit
Know your numbers
List each card with its balance, interest rate and minimum repayment. Seeing everything in one place makes the next steps clearer.
Stop adding to the balance
Switch everyday spending to a debit card, and remove saved card details from shopping sites.
Pay more than the minimum
Even a little extra each month reduces the balance faster and cuts interest.
Pick a strategy
Focus on the highest-interest card first (the avalanche method), or clear the smallest balance first for a quick win (the snowball method).
Ask for help
Call your card provider to ask about hardship options or a lower rate. For free, confidential counselling, ring the National Debt Helpline on 1800 007 007.
Where a fixed-term loan can fit
For a one-off expense, some people prefer a personal loan with a set end date rather than adding to a card. A fixed term means a clear finish line and repayments that don't change. A loan isn't the answer for ongoing card debt, though, and the right choice depends on your situation. Our article on things to consider when taking out a loan can help you decide.
Keep moving forward
Getting off the roundabout takes a plan and a bit of patience, but every extra payment moves you closer to the exit. Small steps add up.