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Understanding Your Credit Card Repayments

Question from Bacha: I am in Melbourne. I got AUD $15000 credit card and I have used all the money. every month it deducts nearly AUD 300. Why

Hello! It sounds like you’re trying to understand why your credit card is deducting nearly AUD $300 every month. Let’s break down the basics of credit card payments and explore some strategies to manage your debt effectively.

Why Your Credit Card Charges You Monthly

When you use a credit card, you’re borrowing money from the credit card issuer. The amount you’ve borrowed, in your case, AUD $15,000, needs to be paid back. If you don’t pay the full amount back by the due date each month, the bank will charge you interest on the remaining balance. The monthly deduction you’re seeing is likely a combination of:

– **Minimum payment**: This is the smallest amount you must pay each month to keep your account in good standing. It usually includes interest plus a portion of the principal amount you owe.
– **Interest charges**: If you’re carrying a balance from month to month, the bank will charge you interest. The rate depends on your credit card’s annual percentage rate (APR).

How to Manage Your Credit Card Debt

Managing a AUD $15,000 debt can feel overwhelming, but there are several strategies you can use to tackle it:

– **Pay more than the minimum**: Always try to pay more than the minimum payment. This reduces the principal balance faster and decreases the amount of interest you’ll pay over time.
– **Consider a balance transfer**: Look for a credit card with a lower interest rate and transfer your balance. Some cards offer introductory periods with 0% APR.
– **Create a budget**: Track your income and expenses to see where you can cut back and allocate more money towards your credit card debt.
– **Contact your credit card issuer**: Explain your situation and ask if they can offer a lower interest rate or a payment plan.

Understanding Interest Charges

The interest on your credit card is calculated based on the APR and your daily average balance. Here’s a simplified example:

– If your APR is 20%, your daily interest rate would be approximately 0.055% (20% divided by 365 days).
– For a balance of AUD $15,000, your daily interest would be around AUD $8.25.
– Over a month, this adds up, which contributes to the nearly AUD $300 deduction you’re seeing.


Managing credit card debt requires a plan and discipline. By understanding how your payments work and exploring options to reduce your interest charges, you can work towards paying off your debt more efficiently. Remember, the key is to pay as much as you can afford each month and to seek out lower interest options that can help reduce the overall cost of your debt.

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