December may be the time of year when you spoil your loved ones with Christmas cheer in the form of generous gifts, but it’s also the season when financial providers rake in a whole lot of moolah.
We have one questions for you: “Does your bank really deserve a Christmas bonus?”
If you answered with a resounding “no” then read on as we reveal the ways to keep that hard earned cash in your pocket, not the banks:
1. Take advantage of 0% purchase rate deals
Have you had the same old credit card for yonks? If the average credit card interest rate in our database of 17.39% is anything to go by, you might just find your current plastic has a sky high rate too. That’s why if you think you may need some plastic to pay for everything from your beachside vacay to your lavish Christmas lunch, an interest free credit card could be just the solution.
Used the right way, a 0% offer can help you steer through the Christmas season without the bite of interest, meaning you’ll avoid paying the card provider a cent. Just make sure you always make the minimum repayment each month and pay the balance in full before the 0% honeymoon period comes to an end!
Top interest free credit cards with a $0 annual fee:
|Credit card||Interest rate||Introductory purchase rate||Annual fee|
|Coles No Annual Fee MasterCard||19.99%||0% for 15 months||$0|
|Bank of Melbourne No Annual Fee||20.49%||0% for 3 months||$0|
|BankSA No Annual Fee||20.49%||0% for 3 months||$0|
|St.George No Annual Fee||20.49%||0% for 3 months||$0|
2. Avoid the cash advance rort
It might be nice to have some crisp notes in your wallet to pay for all those bits and pieces for Xmas, but withdrawing cash from an ATM using a credit card comes with a massive bite of a cash advance rate, which our database shows is on average 19.60%.
You might be thinking “what if I sign up with one of the 0% deals above?” Well the bad news is the 0% interest rate only applies to purchases not cash withdrawals. Another, incentive to avoid making cash withdrawals is the interest free period doesn’t apply, so you’ll be charged the cash advance rate from the day you make the withdrawal.
3. Stick to your provider’s ATM network
A smarter way to withdraw cash is with your debit card, as you are not only taking out your own money but there are no hefty fees generally charged by your bank. But the same can’t be said for ATMs outside your bank’s network, as the providers of these ATMs are more than happy to slap you with an ATM withdrawal fee of usually between $2.00-$2.50.
The answer? A bank account that comes with a generous ATM network, or even better fee free withdrawals at any ATM in Australia like the ING DIRECT Orange Everyday (as long as you deposit over $1,000 a month) and the Buck Debit MasterCard from ME.
4. Don’t get caught out by overdraft fees
It’s easy to splurge at this time of year but keep an eye on your bank balance because if it tips into the minus zone you could end up being charged an overdraft fee. For instance, one Mozo staffer accidentally went into minus twice in one month and was charged $20 in overdraft fees – that’s enough to pay for Uncle Bob’s Christmas cookies!
5. Steer clear of late payment fees
When you’re relaxing poolside in a resort or lunching with loved ones, it can be easy to put your credit card and personal loan bills to the back of your mind. But, there’s a little charge in the form of a late payment fee to watch out for, usually ranging between $15 and $35.
With a credit card the late payment fee is generally charged if you don’t pay at least the minimum payment before the due date. Whereas with personal loans you’ll generally be hit up with this fee if you are unable to pay the ongoing repayment amount in full within 5 business days of the due date.
Our advice? Set up a direct debit from your bank account to the financial provider, so you can enjoy your holidays with the peace of mind your hard earned moolah is in your pocket not the banks!
For more tips on avoiding hefty bank fees, read our Put a plug in the bank fee money drain blog.