4 ways to better handle your finances

We’re a nation of spenders, with one of the highest personal debt levels in the world. That debt, according to the Australian Securities and Investments Commission, includes around $32 billion on credit cards, with the average cardholder paying about $700 in interest a year. Yet there are plenty of ways to be smart about money. Even the smallest of changes can make a difference to your bank balance and set you on the path to better financial health.

Consider balance transfer deals

If you carry a balance on your credit card from month to month, a balance transfer credit card can be one way to get ahead of the debt. It allows you to pay down debt with usually lower or no added interest. To make this strategy work, avoid using the card for purchases and focus on repaying as much of the debt as possible within the balance transfer period. When choosing a deal, pay attention to the revert rate (the interest rate that applies at the end of the balance transfer period), the annual card fee and if a transfer fee applies. If you can’t pay off the entire debt within the balance transfer period, look for another deal with a longer term until the balance transfer offer expires. Keep in mind, that every time you apply for credit it is recorded on your credit report, so it’s wise to avoid applying for multiple offers as it may impact your credit rating negatively.

Negotiate a better deal

From utilities to phone accounts, it pays to ask for a better deal. Most service providers will negotiate a cheaper contract for customers who complain or threaten to take their business elsewhere. That’s because it costs those businesses more to sign up a new client than it does to keep an existing one. Sometimes, it’s just a matter of asking the question. If you’ve had the same contract for a while, chances are good your service provider will have a newer, more competitive plan anyway. Before making the call, do your homework and compare what’s on the market. That way you’ll know if you’re getting the best deal.

Consolidate bad debt

A personal loan could be a good way to address multiple debts – and comes without the temptation of a credit card. Along with the certainty of one fixed monthly repayment, the interest rate of a personal loan is generally lower than that of a credit card. Before taking out a loan, check the fees and repayment flexibility. There may be an application fee, monthly fees and annual fees on these loans and some loans may not allow you to make extra repayments.

Use the sharing economy

Airbnb and ride-sharing app Uber kick-started the sharing economy – and today, two in three Australians save (and earn) money this way. These days as trust in the share economy grows, people are using it to rent out a room in their home, share their car, bike, office space, and even their tools. It's a great way to save money and help out a fellow sharing economy user too.

The advice in this article is general in nature. We understand everyone’s circumstances are different and recommend speaking to your financial advisor or accountant when considering your financial requirements.

More information:

moneysmart.gov.au

Further reading:

data.oecd.org

ratesetter.com.au