How to Get Out of Credit Card Debt: Debt Snowball vs Avalanche, Explained for Australians

General information only. This article doesn't take into account your objectives, financial situation or needs, and isn't financial, tax or credit advice. Consider whether it's appropriate for you and, where relevant, read the PDS and TMD and talk to a licensed financial adviser or registered tax agent. Figures were checked against official sources on the date shown and can change.

Credit card debt has a way of quietly growing. A few big months, a surprise bill, and suddenly you're paying interest on things you bought a year ago.

If that's you, you're far from alone. Moneysmart, citing the Reserve Bank of Australia, says Australians collectively hold around 14.7 million credit cards and owe around $33 billion on them, with almost $18 billion of that accruing interest. It also notes the average credit card interest rate is over 18%.

Getting out of credit card debt doesn't need a clever trick. It needs a clear list, a payoff order and a way to stop the balance growing back. This guide covers each step, including the two best-known methods: the debt snowball and the debt avalanche.

Step 1: Write down exactly what you owe

This is the part most people avoid, and it's the part that makes everything else possible. Moneysmart suggests listing every debt with:

• the balance
• the current interest rate
• the fees you pay, including any penalty for paying off a loan early
• the remaining term or due date
• your current monthly repayment.

Include everything: credit cards, store cards, buy now pay later, personal loans, unpaid bills and fines. Your statements show each rate and minimum repayment. The total might feel confronting, but a number you can see is easier to deal with than a vague sense of dread.

Step 2: Cover your priority bills first

Before you throw extra money at a credit card, make sure the essentials are handled. Moneysmart lists higher priorities as rent or mortgage payments, council rates and body corporate fees, electricity, gas, water and phone, and car repayments if you rely on your car for work or essential travel. Missing these can cause bigger problems than a credit card.

If you can't pay a bill on time, contact the provider early and ask for an extension or instalment plan.

Step 3: Find your "debt money"

Next, work out how much you can put towards your debts each month. Moneysmart calls this your "debt money": what's left after you subtract money going out from money coming in.

Moneysmart's free budget planner makes this quicker. Then look for a few realistic cuts, like unused subscriptions or takeaway. A plan that's too strict is a plan you'll abandon. Our guide to a simple three-bucket budget shows one easy way to set this up.

Why paying only the minimum keeps you stuck

According to Moneysmart, a credit card's minimum monthly repayment is usually a percentage of the closing balance or a minimum dollar amount, whichever is higher. Your statement and PDS show your card's exact figures. As your balance falls, the minimum falls too, so more of each payment goes to interest for longer.

Moneysmart's tip is simple: work out an amount you can afford, and keep paying that same amount even as the balance drops. That alone can pay the debt off faster and save money. Its free credit card calculator shows how long your card would take to clear on minimum repayments, and how much time and interest a higher repayment could save.

Debt snowball vs debt avalanche: which order should you pay?

Both methods start the same way: pay the minimum on every debt to avoid late fees, then put all your extra debt money onto one target debt. When it's gone, roll its whole repayment onto the next target. The only difference is the order.

Moneysmart describes both. Paying the smallest debt first "helps motivate you to keep going", while targeting the debt with the highest costs (fees and interest) saves more on interest over time. Its advice: choose the method you can stick with.

If your rates are similar, the two methods may cost roughly the same. If one card has a much higher rate, the avalanche usually saves more. Picking a method this week beats picking the perfect method next year.

Stop the balance growing back

Paying down a card while still spending on it is like bailing out a leaky boat. A few moves Moneysmart suggests:

• Reduce your credit limit. You can ask your provider to lower it online, by phone or in a branch. Moneysmart says it usually takes one to two business days.
• Cut down the number of cards. Consider cancelling each card as you pay it off, perhaps keeping just one.
• Pay on time, automatically. Set up a direct debit for the day after your pay lands, so you avoid late fees and extra interest and help keep your credit score healthy.
• Build a small buffer. A starter emergency fund keeps the next car repair off the card.

Can a balance transfer or consolidation loan help?

Sometimes, but read the fine print carefully. Both move your debt rather than remove it.

Credit card balance transfers

A balance transfer moves your debt to a card with a 0% or low promotional rate. Moneysmart's key cautions:

• the promotional rate usually lasts between 6 and 24 months, and any balance left after that is charged a higher rate
• there's usually a one-off transfer fee, calculated as a percentage of the amount you move
• missing a required repayment can cancel the low rate
• new purchases on the card are usually charged a much higher rate, and your repayments may go towards those purchases first
• applying for several cards in a short time can harm your credit score.

Moneysmart also notes that if you're already struggling with repayments, a balance transfer might not be right for you.

Debt consolidation loans

Rolling several debts into one loan can simplify repayments, but Moneysmart warns it can cost more if the rate or fees are higher or the loan runs longer. Its own example: a $20,000 debt at 10% over 5 years has a total cost of $25,496, but at 6% over 15 years the total cost is $30,379, even though the rate is lower. Be very cautious about turning unsecured card debt into a loan secured against your home or car.

If you're struggling to keep up

If repayments are already slipping, act early. Taking action straight away can stop a small problem becoming a big one.

• Ask your lender for financial hardship assistance. Search "hardship" on your lender's website. When you ask, your lender must consider you for hardship assistance. Moneysmart says a hardship arrangement does not affect your credit score, and the listing on your credit report is deleted after 12 months.
• Talk to a free financial counsellor. The National Debt Helpline is free and confidential: 1800 007 007, weekdays 9:30am to 4:30pm, or live chat weekdays 9am to 8pm. Aboriginal and Torres Strait Islander peoples can call Mob Strong Debt Help on 1800 808 488.
• Free debt management support. Moneysmart also points to Way Forward (1300 045 502), a not-for-profit that can arrange affordable debt repayment plans for people in long-term hardship.

Be wary of companies promising to make your debt disappear. Moneysmart says debt management firms can be expensive and that free services may achieve the same outcome. If you use one, check it's licensed on ASIC's Professional Registers first.

Check your credit report while you're at it

Moneysmart says you have a right to a free copy of your credit report every three months. Check that every debt listed is yours. You can ask the credit reporting agency to fix a genuine mistake for free, so there's no need to pay a company to do it.

Frequently asked questions

Is the debt snowball or debt avalanche better?

Neither is right for everyone. The avalanche method (highest interest rate first) generally costs less in interest. The snowball method (smallest balance first) gives you quicker wins, which helps many people keep going. Moneysmart describes both and says the important thing is to choose a method you can stick with.

How long will it take to pay off my credit card with minimum repayments?

Usually a long time. Moneysmart explains that the minimum repayment is usually a percentage of your closing balance or a minimum dollar amount, whichever is higher. Your statement shows your card's exact figures. Because the minimum shrinks as the balance shrinks, paying only the minimum can stretch the debt out for years. Moneysmart's free credit card calculator shows your own timeline and how much a higher, fixed repayment could save.

Should I do a balance transfer to pay off credit card debt?

It can help some people, but it's not a fix on its own. Moneysmart notes that promotional rates usually last 6 to 24 months, there's usually a one-off transfer fee, missing a repayment can cancel the low rate, and any unpaid balance moves to a higher rate when the offer ends. If you're already struggling with repayments, Moneysmart says a balance transfer might not be right for you.

Will asking my bank for hardship help hurt my credit score?

According to Moneysmart, a financial hardship arrangement does not affect your credit score. Your credit report can show that an arrangement was in place, and that listing is deleted after 12 months. Your lender must consider you for hardship assistance when you ask.

Where can I get free help with credit card debt in Australia?

You can call the National Debt Helpline on 1800 007 007 to speak with a free, confidential financial counsellor (weekdays 9:30am to 4:30pm, or live chat weekdays 9am to 8pm). Aboriginal and Torres Strait Islander peoples can also call Mob Strong Debt Help on 1800 808 488.

Sources

Checked on 10 October 2026. Official sources are updated regularly, so follow the links for the latest figures.

1. Moneysmart (ASIC): Pay off your credit card (last updated 28 July 2026)
2. Moneysmart: Get debt under control (last updated 31 August 2026)
3. Moneysmart: Credit card calculator (last updated 18 June 2026)
4. Moneysmart: Credit card balance transfers (last updated 9 September 2026)
5. Moneysmart: Debt consolidation and refinancing (last updated 31 August 2026)
6. Moneysmart: Financial hardship (last updated 31 August 2026)
7. Moneysmart: Credit scores and credit reports (last updated 9 September 2026)
8. Moneysmart: Pros and cons of debt management firms
9. Moneysmart: Budget planner
10. National Debt Helpline (free financial counselling)