Infocus

The silly season is here, and while many people are filled with the festive spirit, many others are filled with stress and dread.

But Christmas doesn’t have to be a nightmare if you plan ahead and use a little technology!

Budget & lists

The best way to avoid bill shock in the new year is to plan exactly what you’re going to buy for who, and only buy that. As tempting as window shopping can be, it’s easy to overspend or buy things just because they’re on sale. It might help to check catalogues in your letterbox or compare prices online to find the best deal.

It may also help to visit an ATM as soon as you get to the shopping centre and withdraw your Christmas budget – that way once it’s gone, it’s gone. Alternatively, set a low limit on your credit card so you don’t overspend.

Click & collect

Many retailers now offer click and collect options that can take the stress out of walking the aisles, especially if you’re time poor leading into Christmas. It can also help with carpark rage, as you may be able to use express parking or collect from a designated collection point.

Avoid peak shopping times

The Commonwealth Bank has crunched the numbers and found that Saturday December 16, or Super Saturday, is likely to be the busiest shopping day in the lead up to Christmas (based on last year’s data). As Christmas Day falls on a Monday this year, Saturday December 23 is also likely to be busy.

Stores are generally able to open until midnight the week before Christmas (depending on your state), so take advantage of this late trade. Roy Morgan data shows Monday is the least popular day for grocery shopping, so that could be a great time to make your way to the shopping centre.

Whatever happened to homemade?

Once upon a time, gifts were made at home with love, but that seems to have fallen by the wayside.

It’s these gifts that are often more thoughtful, labour intensive and highly appreciated – and they can cost you less money. Think about homemade tree decorations, cakes or biscuits or even a simple but nicely decorated homemade card instead of ‘stocking stuffers’ this year.

Don’t forget your ship when you shop

If you’re shopping online this Christmas, don’t forget to factor in delivery times to avoid long faces on Christmas Day. Australia Post advises that 1pm Thursday December 21 is absolutely the last day to send anything via Express Post to arrive before Christmas.

Parcels and cards can take anywhere between 2 and 6 business days to be delivered, meaning you’ll want to have your shopping done by Thursday December 14 if your merchant uses Australia Post.

Some online stores may use a dedicated courier service which may bring down this deadline, so be sure to check with your favourite store to avoid disappointment.

Keep your receipts

Even if you give something as a gift, keep the receipt for warranty and refund purposes. It is far easier to return or exchange an item if you have proof of purchase. If you’ve given a gift that is not fit for purpose or is faulty, consumer protection still applies. Read more about consumer rights and guarantees here.

Gift cards DO expire

Gift cards make a quick and easy present for that hard-to-buy-for person in your life. But not everyone is using them before they expire, boosting retailers bottom lines to the tune of about $71million a year. Although laws to ban or limit expiry dates on gift cards are planned (in NSW, gift cards will have a minimum 3 year expiry from March 2018), for now – if you don’t use it, you lose it. The standard expiry date is 12 months from the date of purchase, so ensure the retailer clearly writes this date on the card when you purchase. Then nag your friends and family to make sure they spend it!

Boxing Day

We’ve seen the news stories with crowds flooding Myer and David Jones at 6am on Boxing Day. It’s easy to get caught up in the hype of huge discounts on big sale days, but only buy what you need. It can be a great chance to stock up on linen, underwear and work clothes, and it’s easy to grab items just because they are 70% off.

Much like Christmas shopping, a great tactic is to plan ahead, check out the deals online ahead of time, and write a list of where you’re going and how much you’re going to spend – then stick to it. It may not be as fun as a frenzy, but you’ll still get great deals without the bill shock later. Many retailers start their sales on Christmas Day, giving you the opportunity to get in nice and early.

Top tips:

• Plan ahead: make a list, set a budget and stick to it
• Instead of buying all your gifts, try making some
• Avoid the biggest shopping days by shopping earlier in the week and late at night
• Keep your receipts, even for gifts
• Don’t get sucked in by big discounts on Boxing Day

With Christmas fast approaching, it can be easy to be tempted by 0% interest credit card and balance transfer offers to offset our silly season spending. After all, Australians are expected to spend over $50 billion in the Christmas trading period this year.

Even as credit card debt is at its lowest point in a decade, research from comparison site Finder found that the average balance of someone looking for a better deal is $12,067. With an interest rate of 18%, that’s over $2000 a year in interest, not including annual fees and late payment charges.

ASIC is also in the process of conducting an investigation into ‘zero interest’ offers, as they try to determine if banks and lenders are deliberately targeting people who will be unable to pay off the balance in time and get caught in a debt cycle.

So is it worth getting or switching to a 0% interest credit card? That will depend on the card, and your circumstances…

PROS

Paying down debt

Transferring your existing credit card balance to a new card with a 0% interest transfer can be a great way to halt extra charges so you can get on top of your debt.

It’s important to check the fine print on any new credit card, as there may be transfer fees, annual fees and a higher than average interest rate in you don’t pay off the balance in the nominated period.

A better deal

All the banks are after your business, but it turns out 47% of us are loyal to just one bank or credit union, choosing to keep all our products with the one institution.

While bundling your finance products can have its advantages, it’s more likely you are paying for convenience. So talk with your bank or lender about getting a better deal on your combined products, or start shopping around. And don’t be afraid to split your loyalty across a number of providers.

Travel insurance

Many credit cards these days come with included travel insurance, which can be a great bonus if you travel a lot. Usually reserved for top-tier credit card customers, it is possible to find low rate card with complimentary travel insurance. As always, terms and conditions apply like a minimum spend, maximum coverage and the coverage needs to be activated. So check the Product Disclosure Statement (PDS) before signing up.

CONS

Higher interest rates later

An Essential Research poll found that nearly half of us don’t even know what interest rate we pay on our credit card. A common trait among ‘zero interest’ cards is an inflated interest rate at the end of the promotion period, which can be anywhere between 300 and 1000 basis points above other cards on the market. New purchases and cash advances may still incur the full interest rate. So if you do switch, it is essential to be disciplined in paying off your card before the ‘revert rate’ kicks in.

The fees add up

Just because there’s 0% interest doesn’t mean there are no fees involved. Low or no rate cards often incur annual fees of between $40 and $99 per year (although sometimes this fee is waived for the first year).

Even though you’re transferring your balance to a 0% card, you may still incur a balance transfer fee (commonly 2% of the balance) on top of that debt. Plus you could still be subject to late payment fees, dishonour fees and merchant fees.

Rewards points

Lenders love to lure in consumers with rewards points and bonuses to switch and spend on their credit cards. But Citi research has found that 38% of Aussies using reward credit cards are underwhelmed by what’s on offer, while another 52% didn’t even know what they could do with the points they earned.

On top of that, the value of reward points is on the decline, in some cases not even equating to the annual fee charged by the issuer. And remember that rewards points are usually awarded for purchases, so if you are transferring a balance, rewards points are unlikely to affect you.

So think of rewards points as a bonus, but not a deciding factor when choosing a credit card.

The judgement

Most financial experts will classify having credit card debt as unfavourable, because there are no viable assets to show for it – like an investment or property. Unless you can successfully juggle paying the balance off before the interest-free period ends, you are likely to enter a debt cycle that can be hard to get out of.

If you need help with your budget or managing your debts, speak with a financial adviser or visit the website.

The information contained in this article is general in nature and does not account for individual financial circumstances and outcomes.

Everywhere you turn these days, you’re being asked to sign up for something. Whether it’s handing over your email address for an instore promotion or giving up your credit card details for a “free” trial, it’s easy to lose track of what you’ve actually signed up for.

Plenty of subscription services like Stan or Apple Music offer a ‘free trial’ to lure you into signing up, but if you have to enter your credit card information to receive the trial, be sure to read the fine print. Usually if you don’t opt-out when the trial period expires, you are automatically signed up to a paid plan, costing you money.

If you end up using the service, then obviously this won’t matter. But if you use it for a couple of days, and find it’s not for you, it’s easy to shrug it off because it was just a free trial.

Consider this – you sign up to Stan, Netflix and Foxtel Now all at once using their free trial options. After using all three for a couple of weeks, you decide Foxtel Now is right for you at $15* per month. However, your Stan and Netflix trials end, and you are automatically switched to their base plans at $10* each per month. You’re now paying $35* per month for 2 services you’re not using. Over a year, that’s $240* that could be put towards savings or super growth to help you down the line.

It’s not just subscriptions that can haunt your finances. Direct debits are another way your bank balance can take a hit without you realising it. Direct debits can be great for Automatic top-ups for tolls or public transport, gym memberships and bill payments, but trying to end a direct debit can be a nightmare.

The good news is that banks are obliged to process cancellations themselves if you set up the direct debit with a BSB and account number. If they tell you they can’t, or to contact the retailer, the bank is in breach of the banking code.

If the direct debit was set up via a credit card, be sure to send notice in writing (either by email or standard mail) and keep a copy for yourself, and give the merchant 30 days to action. If they don’t, speak with your bank or the Financial Services Ombudsman.

Top Tips:

• When signing up for a free trial, put a calendar reminder for 30 days later in your phone to remind you to cancel or pick a plan
• Check your bank statements or banking app regularly to ensure there are no unauthorised transactions happening
• When authorising a direct debit, use a dedicated card or account that you can control the spend on, and turn off should your debit/s continue after you have requested them to stop.

*Prices indicative only. The information contained in this article is general in nature and does not account for individual financial circumstances and outcomes.