Many people have ongoing credit card debts which they are finding difficult to pay back. These outstanding credit card balances attract interest charges at high rates and can slow down the process of paying off your debt. Most credit cards have interest rates as high as 15 – 20%.

If you have a home loan and have money available for redraw, it makes sense to pay off your high interest credit card debt with money you redraw from your home loan. Home loan interest rates are currently around 4 – 8% which is much lower than that of credit cards. Many home loans do not charge to access money for redraw.

If you currently have a credit card debt of $10,000.00 and your current interest rate is 19.99%, you would be paying $1999 over the year in interest charges. Not to mention any compound interest if you are not repaying much. If you borrowed this money from your redraw facility at a low rate of only 5%, you would pay only $500 over the year in interest charges. This is a difference of almost $1500 over the year. Paying off your credit card debt using your redraw facility can mean the difference between thousands of dollars a year. Instead of paying $1500 in interest charges, you could use this extra $1500 to pay off the principal of the loan instead of throwing it away in interest charges.

Using your redraw facility is a great way to clear high interest credit card debts and pay off your debt faster.