With the festive season now officially underway, it’s not too late to review your household finances and get ahead of the curve. Conducting a health check on personal finances can minimise the likelihood of waking up to a financial hangover in the New Year.
We've rounded up six tips to help you better manage your credit debt over this holiday period:
Before you even step foot in a mall, draw up a list of gifts that need to be bought and an approximate budget for each person you’re shopping for. Start looking for gifts early, take advantage of sales events and avoid leaving all the shopping until the last minute. Time pressures can lead to impulse purchases which can quickly blow out the budget.
An effective way to avoid overspending is to keep track of purchases. There are lots of budgeting tools available to help manage spending. Many banks offer spend tracking as a standard in their online banking apps. Find what your bank already has and what will work best for you.
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This reduces late payment fees and helps keep credit records clean. Getting into this habit now could save you a headache in the future. With the Comprehensive Credit Reporting coming into place, Australians are faced with tightened lending criteria. For more information read our article 6 ways to improve your credit score quickly.
Savings accounts and credit cards are often forgotten about once setup. Look for a savings account that has a high interest rate, low account fees along with accessible ATMs and service. Consider cancelling any credit cards that aren’t used regularly. Many come with annual fees and high interest rates which often kick in once the initial ‘offer’ period is over, all of which can quickly accumulate.
Car, credit cards and personal loans generally come with interest rates that sit in the double digits. Think about combining high interest debts into your home loan. This can create a positive impact on your overall outgoings and a saving in interest paid over the life of the loan.
This is your biggest household expense so you shouldn’t just ‘set and forget’. Buying a home can be the most expensive purchases you’ll make and as banks don’t often reward borrowers for loyalty, it pays to get into the habit of reassessing your home loan periodically to ensure it continues working hard for you.
Switching to a better interest rate on your home loan can save Australians more than $2,300 by next Christmas. This offers a significant opportunity to homeowners and can cover major costs such as renovations.
Our Lendi Home Loan Index Q3 showed that of owner occupier borrowers who were initially looking for an interest only home loan, 84.9 per cent ended up choosing a principal and interest product**. This suggests that borrowers are inclined to make financially responsible decisions when presented with greater choice, education and have access to support.
You have thousands of home loan options to choose from at your fingertips. Do your due diligence and consider the full scope of products available to find what’s right for your individual circumstances.
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*Calculations based on refinanced principal and interest loans by owner occupiers who have refinanced with Lendi from 1 January-31 October 2018. The difference in savings is based on customers’ previous and new interest rates.
**Based on owner occupiers who settled their home loan using Lendi between 1 January-31 October 2018.
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