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Did Christmas cost more than you expected?

If so, you are probably not alone. How much of that money you overspent over the holiday period went to your credit card?

New Zealanders spent more than $36 billion on their credit cards in 2016. To make matters worse, Canstar estimates that about 63% of credit card spending ends up incurring interest, with an average interest rate of 19.24%.

This is not a pretty picture. Not only do you end up spending plenty of money on interest, but using your credit card and not paying your bill on time also inflates the cost of things you buy – and makes it too easy to live just a little beyond your means.

Did you know that your mortgage could help you ease the squeeze?

Your mortgage could be the perfect tool to tidy up personal loans and credit card debt and get rid of high interest rates.

As an example, let's say you have a $20,000 debt on your credit card. You could end up paying an extra $3,800, if your credit card is on a 19% interest rate. However, if you were to consolidate the $20,000 debt into a home loan with a 5% rate, you would only be paying $1,000.

That's a $2,800 saving, just by being smart about managing your debt! If you were on a $50,000 annual salary, this would equate to giving yourself an instant 5.6% pay rise AFTER TAX. When was the last time you got one of those?

Ideally, once you have consolidated your debt, you should increase your repayments to cover both your home loan and the extra debt you added in. Make use of the lower interest rate, but don't let that be an excuse for delaying the goal of paying off your mortgage.

If you have any questions, contact us on mortgages@apexgroup.co.nz.