How to avoid credit card fees and interest

This article is part of a fictional case study series following "Sarah", a typical first home buyer in Victoria. Read each article to follow "Sarah" through a variety of articles exploring issues related to buying a home.

About a year into her savings journey, Sarah decided to open her credit card statement. It wasn't good...but it wasn't the total debt that bothered her. It was the interest! Carrying that balance over month-to-month was really eating into her savings abilities.

When embarking on your first home journey, reducing the amount of money you pay to other debts is crucial. Unfortunately, many first home buyers still find themselves paying off credit card bills and interest.

That’s not the position you want to be when looking for a first home. For one thing, having credit card debt can reduce the amount you can borrow. Not to mention, it’s sucking up money you could use for a bigger deposit.

Now, instead of getting rid of that credit facility in total, Sarah did a few things to make sure her finances were in the best position:

  • Sarah reduced her credit limit. By reducing her credit limit, Sarah has stopped herself from the temptation of spending more – and it also increases her borrowing capacity later on. It's good to remember that banks always calculate interest based on the full limit of the card, even if it's at a zero balance.
  • Sarah started spending according to a written budget. Credit card accounts go into overdrive when you don’t pay attention to what you’re spending. By just being careful about her spending habits, Sarah was able to stop her finances from spiraling out of control.
  • Sarah paid off her credit card instead of saving more for a deposit. It's a good idea not to have any debt when applying for a loan. So instead of saving for a deposit for a few months, Sarah just threw all her money at the debt. Yes, it hurt – but it’s better than paying 20% interest.

The most important thing Sarah did after that was to make sure that she only used her credit card in conjunction with her written budget, and then paid it off each month. By doing that she’ll save potentially hundreds of dollars on interest every year – and she still gets to keep the rewards points!


By just writing out a simple budget and using her credit card as a tool, Sarah can save heaps of money and get into her house faster.

Home First
Home First