CREDIT CARDS AT CHRISTMAS

Credit cards are a convenient way to pay for the things you want, and ever so tempting at Christmas time, but this convenience can come at a cost. It can be very easy to rack up more debt on your card than you expect or are comfortable with, so it's important to stay in control.

Here are some things to consider whilst using your credit card at Christmas:

1.    OVERSEAS TRANSACTION FEES

If you do Christmas shopping online with an international retailer, you could end up paying an international transaction fee worth 2–4%.

2.    OFFERS TO INCREASE YOUR LIMIT

Banks sometimes offer you a higher credit limit on your card.  If you receive an offer to do this around this time of year if could be very tempting to take them up on this.  However, getting a higher credit limit can be bad for your Christmas budget, since the temptation to overspend will be magnified. You could easily end up spending more than you should and paying much more in interest charges too.

3.    CONSIDER REDUCING YOUR CREDIT LIMIT

If you want to avoid the temptation to overspend on your card, ask your credit provider to reduce your credit limit. You can do this by phone or by visiting a branch. In most cases, your account will be updated within 1-2 business days.

4.    PAY ON TIME

When you get your credit card statement, check the date the payment is due, and make sure you pay on time. This will help you avoid extra interest charges or hefty late payment fees.

To make it easier to pay on time, consider setting up a direct debit to pay a fixed amount off the balance owing each payday. Just make sure these payments cover at least the minimum monthly payment due on the card.

5.    MAXIMISE YOUR REPAYMENTS

If you only make the minimum repayments on your card each month, you will pay a lot of interest and it could take you a long time to pay off your balance.

Why not make a plan to get rid of your credit card debt and pay more than the minimum repayment each month.

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TIPS TO STAY ON TRACK WITH YOUR CHRISTMAS SPENDING

There is no doubt Christmas is a time to be enjoyed.  However, it is an expensive time of year, with gift giving, more social outings etc. It can really stretch the budget.  Here are some tips to help you stay on track this Christmas:

1.       TRACK YOUR SPENDING

I know it sounds boring, but it will help.  Set a budget for things like presents, food for Christmas Day.  After each day’s shopping, record what you have spent and what you have left. 

 2.       ‘BAKE’ YOUR GIFTS

Are you a bit of a MasterChef in the kitchen?  Why not bake some gingerbread cookies, fruit mince pies or any festive treat.  Package them up in some cellophane or cardboard boxes and give these as gifts.  A lot cheaper than buying them already made, and I bet they will be a lot tastier as well.

 3.       RESEARCH AND BE PATIENT

Retail is so competitive these days.  Don’t just purchase an item the first time you see it.  Research online or wait until a discount is offered.  Most retailers are having Different offers each day so you really shouldn’t need to pay full price.

4.       SHARE THE COST

If you are hosting Christmas lunch, ask everyone to bring a plate of food.  Most people won’t mind and this will save a lot of money and time.

5.       DON’T SPEND MONEY YOU DON’T HAVE

Carefully consider putting purchases on your credit card or arranging some kind of quick finance with high interest.  You will regret it come January.

NEW PENSION ASSET THRESHOLDS

How will they affect you?

 The assets test, effective 1 January 2017 will see some Australians receive the full age pension.  However, a significant amount of retirees receiving a part pension will have their retirements reduced and some will lose all entitlements.  

There are certain things you will need to consider to ensure your money is working in the best way for you.  It might be worth trimming down your assets before the changes come in.  Examples include bringing holidays or home renovations forward or maybe moving savings into a spouse’s super.

This government link, https://www.humanservices.gov.au/customer/services/centrelink/age-pension has all the information regarding the asset thresholds and contact numbers for Centrelink  to find out how your Age Pension entitlements might be affected.

Whether you are already receiving the age pension or not, it is important to keep abreast of changes to the pension guidelines.  It might be worth contacting your  financial adviser to explore possible strategies to make the changes work for you.

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FINANCIAL TIPS FOR ALL GENERATIONS

We all see money differently and have grown up alongside different financial situations eg. The Depression where there was no money compared to today’s world where many of us are living with a huge debt over our heads.  Here are some tips that may help each generation with their finances.

GENERATION Z (teens to early 20s)

This generation tend to want it and want it now!  Gen Zs would do well to understand that financial success takes diligence and patience.  They would do well to live within their means, creating a budget and spending less than they earn.  They have time on their side, start saving, even a small amount each week and putting it away for the future.

GENERATION Y (20s and early 30s

Life is starting to get real for Gen Ys.  They may have a HECS Debt, just got married and started a young family and/or bought a first home.  Aim to have 3 to 6 months’ worth of salary put away for unexpected emergencies.  Consider insurance, especially if you have started a family, both life and income protection.  Gen Ys also have time on their side, participate in a retirement savings plan at work, if offered.

GENERATION X (30s and 40s)

Gen Xs may have home ownership, older children, a great career.  Time to review your insurances, take care of your health and create a Will.

BABY BOOMERS (50s and 60s)

Baby boomers need to shift their retirement savings into high gear.  Visit a financial professional if you haven’t already to ensure your assets are invested to ultimately provide a lifetime of income.

RETIREES

Time to enjoy!  First, review the basics – develop a realistic budget and don’t exceed your spending limits.   A financial planner can help you determine the best investment strategy to help ensure you don’t outlive your assets.

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CREDIT CARD CAUTION

There are many reasons to be cautious of credit cards.   If you are aware of some of reasons you can use them to your advantage. Here are a few things to be wary of:

HIGH INTEREST RATES

The biggest one is the fact that the interest rate on most credit cards is around 20% even though the cash rate is at an all time low and keeps going down. Credit cards are tempting to use and are designed that way to maybe spend money we wouldn’t normally have. If you don’t pay the total outstanding balance each month, you will interest on the entire balance from day one.

EXTRA CHARGES

Many retailers, airlines etc., charge a fee for using a credit card. This is due to the hidden fees they are charged from the banks. The government has recently stepped in to minimise these charges however, you still need to be aware and maybe choose another method of payment if charges do apply.

DECREASE IN REWARD POINTS

With the government introducing new regulations for the banks, the banks are likely to make you pay some other way. Keep an eye on the rewards you were receiving and any notification of that changing/decreasing. Some cards are putting a cap on the amount of points you can accumulate. Be savvy and maybe apply for joint cards for your partner and yourself, rather than having them combined.

Have a look at the CANSTAR website (http://www.canstar.com.au/credit-cards/) and click on the ‘Which card may suit me?’ link to find out which card may be the best for you.

If you can live without one, that also may be a good option.

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