Internet with offset account: When we receive a bill sometimes, we are afraid we will forget to pay so we pay it straight away. Here is a simple way to do the same but also save.
If you have an Offset Account with your property loan, every day you have funds in that account it is saving you money. So when your next bill arrives, look to see when the due date to pay is; then go onto your internet banking, but instead of paying it immediately, schedule the bill to be paid 2 days prior to the due date. This way you cannot forget to pay and the funds stay in your account longer, giving you the extra savings in your offset account.
If you have no-cost redraw available on your property loan, make sure you know what your minimum redraw amount is and if there are any costs associated with your redraw. Say you have $50 or $100 left at the end of the month, instead of leaving it in your bank account with very little interest rate and what little has to be taxed, transfer this amount into your property loan via the internet. You can use pay anyone, and then if you need it you can always transfer it back. This saves you money on your loan, especially if you’re paying principal and interest which in most cases is amortised.
If you currently use or are learning to use internet banking, it is worthwhile. It saves you time and you have access to all your transactions. If you have added your BPay for common bills, you can then have a look at all your electricity payments, etc. and see how much they differ, etc.
There are so many different bank accounts around, but most of us just want an easy-to-operate account with low or no fees. Many of these accounts are only $10 – $15 p/m and give you internet access, debit card, EFTPOS access, and assisted access. If you are paying more than this, have a look at why? What are you paying for and are you using the features?
If you have no-cost redraw available on your property loan, make sure you know what your minimum redraw amount is and if there are any costs associated with your redraw. Say you want to save for a holiday, or for the children’s school fees, or even your council rates – you can setup a direct debit so a monthly /fortnightly/weekly amount comes out of your bank account and goes into your loan account. It then saves you interest on your property loan while the money is in there, and you have the money available when the school fees or council rates, etc. come around.
I have been in finance for over 12 years and it always astonishes me when I ask people what credit card they have and what interest rate is it, as well as why did they obtain that particular credit card? Most people can only answer one of the three questions without looking at their credit card statement.
If you can only answer one of the above questions, give yourself a good hard slap – you shop around to save on your home loan on the internet or shopping centers to save a few dollars, and here you are with a credit card that could be as high as 20% interest.
Seriously though, it is a little strange how we check and try and save on groceries, etc. and we forget to check our credit cards and insurances once a year. Let’s have a look at how to use a credit card.
Firstly, it is so much easier to pull out a credit card, bag your goods, and walk out the door. Did you even look at the receipt as you signed it? Probably not. Now let’s think if you would have still purchased the item if you had to pull out cash? I hear you saying, of course! OK, so you pay your credit card balance off every month and never have to pay interest? Oh – silence – that is because you cannot afford to pay the balance off every month, which means you are spending more than you have.
So to fix this: one, get the mind set of when you pull out your credit card, visualize yourself pulling cash out of your purse or wallet that $50 dollar and $10 dollar note. Second, have a think about your credit card limit; do you really need a limit of $5,000 or $10,000, of course not. You should only be using an amount that you can pay in full by the end of the month, so lower the limit to $1,000 or $2,000. Three, what interest rate are you paying? There are a lot of lower rate cards in the market place; so if you do normally have a balance left on your credit card, make sure you use a lower rate card. If you owe a high amount on your current credit card and it is going to take you some time to pay it off, obtain a credit card which offers a low transfer rate over 12 months or longer. Then, transfer the amount across and get rid of the previous card so you do not do yourself any further damage and pay as much as you can off the new rate credit card while it is at the lower rate.
UP TO 55 or 45 days interest free, get to know how your credit card works. Your interest free days do not start every time you purchase something; they start from your statement period in most cases, but it also depends on if you pay the closing balance of your statement in full by the due date.
It is like a thank you from the card company, honoring you for being diligent in your payments and giving you something back in return.
Say you had a credit card with up to 55 days interest free, and your credit card statement starts on the 1st of every month and ends on the 30th of every month. If you have up to 55 days interest free, your credit card bill will be due on the 25th of the next month. For example:
This means that there is a total of 55 days from the 1st of April including the day your bill is due.
On the 1st of April you make a purchase of $100. No interest will be charged on the amount of that purchase up to, and including, the 25th of May. You get 55 days interest free on that purchase.
On the 20th of April you make a purchase of $150. No interest will be charged on the amount of that purchase up to, and including, the 25th of May. You get 35 days interest free on that purchase.
On the 30th of April you decide to make a purchase of $200. No interest will be charged on the amount of that purchase up to, and including, the 25th of May. You get 25 days interest free on that purchase. You will not get charged any interest on those purchases if you are able to pay off your total credit card balance of $450.
If you were only able to make a minimum payment of say, $25, then you will be charged interest on the amount left over from April. That is, interest will be charged on $425. The amount of interest charged for your remaining April balance will show up in your next credit card bill.
When you fail to pay off your debt in full on any given month, you will lose the privilege of having interest free days. Which means you will pay more interest than you thought. Be sure to make your payment in full by the due date each month and you won’t need to worry. You should also understand that unless you do pay off your outstanding balance by your due date, your 55 interest free days will not be granted to you.
Remember that the days that statements begin, end, and are due depend on the bank’s operations. They will be different from bank to bank.
Also know your statement dates; so if you are purchasing something big, you will have 55 days to pay it off. As per the above example, if you purchased on the 25th May you will only have 25 days to pay it off.