How to use your credit card effectively during COVID-19
29 Apr 2020
As the COVID-19 lockdown continues around the country, Aussie households have had to adjust to a new way of living.
But unfortunately, monthly living expenses have not shared the same shift. This has left many cash-strapped Aussies struggling to pick up the bills, particularly when relying on their credit cards.
Whether you’ve maintained or lost your job during the pandemic, a credit card can be handy in the case of emergencies. But how do you keep yourself from going overboard and winding up with a stack out debt?
There are different ways to maintain responsible spending during this unprecedented time, as not every household’s circumstances are the same. We’ve jotted down three common situations many Aussies may be in as well as some suggestions for keeping their credit in check.
RELATED: Four credit card tips for financially strapped times
Who you are: Employed with the same income
Your situation: You have remained employed during the pandemic and have a regular monthly salary. You’re also most likely to be working from home and are no longer having to travel to and from work.
If you are currently employed and have a stable income, you might not be using your plastic as often as others. In this case, you may be in a financial position to avoid using your credit card altogether. Or depending your pay cycle, might use it in situations where you’re running low on cash but expect to be paid soon.
It might be worth using a card this time to get on top of any debt you may have incurred prior to the pandemic. It might also be a good idea to make more than minimum repayments. For instance, using the money you would have spent on travel expenses.
RELATED: Coronavirus credit card cuts: Which banks have slashed rates?
Who you are: Employed with a reduced income
Your situation: You are still employed during the lockdown, however, you have had your regular income reduced. This could be because you have had to take a wage cut or you no longer work the hours you used to.
If your income has suffered a blow in the last few weeks, your first step should be to revisit your monthly budget. There are a few categories that would have changed and will need to be adjusted, such as travel, eating out and frivolous spending. Doing this can help keep you in control and provide you with an insight into the essential areas your money needs to go, like groceries and bills.
Depending on your circumstances, this approach could mean you can only make the minimum repayment on your credit card. It’s important to at least make this minimum amount each month, as skipping payments could land you a late payment fee and a mark on your credit history.
Who you are: Employed, but receiving financial assistance
Your situation: Your place of employment has been severely affected by COVID-19 and you are receiving Centrelink of government financial assistance.
If your job and income have been severely impacted due to COVID-19 and you haven’t got an emergency savings account to turn to, a credit card may feel like your only option. If this is your situation, get in touch with your credit card provider to figure out your next step. You may be able to have repayments deferred or paused, or be placed onto a financial hardship plan. You are also able to do this if you have a home loan you are repaying.
Keep in mind that it’s best to avoid using your credit card to withdraw cash. Not only will you pay interest on the cash immediately, but cash advance rates are typically higher than purchase rates, so you may wind up paying more in interest over time.
Mozo credit card tip: One final thing to remember is that if you do need to use your credit card during this time, it’s important to establish a repayment plan so you can repay your balance when your budget allows it.
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Apply By 01 August 2021
Bendigo Bank Low Rate Credit Card
0% p.a. for 24 months and then 11.99% p.a. (2.00% balance transfer fee)
11.99% p.a.
$45
0% p.a. balance transfer for 24 months (Reverts to 11.99% p.a). Low annual fee of $45 and no fees for additional cardholders.
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11.99% p.a.
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0% p.a. for 24 months and then 11.99% p.a. (2.00% balance transfer fee)
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13.99% p.a.
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55
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3.00%
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$45
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$15.00
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0.50%, Min $3.25
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Bankwest Breeze Mastercard
0% p.a. for 26 months and then 10.99% p.a. (2.00% balance transfer fee)
10.99% p.a.
$49 $0 in the first year
Enjoy 0% p.a on balance transfers for 26 months (2% BT fee applies) then 10.99% thereafter. No annual fee for the first year. Limited time only. Other fees, T&Cs apply. New Mastercard Breeze customers only.
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10.99% p.a.
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0% p.a. for 26 months and then 10.99% p.a. (2.00% balance transfer fee)
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21.99% p.a.
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55
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0.0
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2.95%
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$49 $0 in the first year
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$25.00
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2%, Min $4.00
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Defence Bank Foundation Credit Card
3.99% p.a. for 6 months and then 8.99% p.a.
3.99% p.a. for 6 months then 8.99% p.a.
$45
Defence Bank Low Rate Credit Card offers a 3.99% p.a. 6 month introductory rate on balance transfers, purchases and cash advances. Up to 55 days interest free on purchases.
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3.99% p.a. for 6 months then 8.99% p.a.
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3.99% p.a. for 6 months
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3.99% p.a. for 6 months and then 8.99% p.a.
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8.99% p.a.
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55
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3.00%
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$45
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$20.00
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4.1
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St.George Vertigo
0% p.a. for 28 months and then 21.49% p.a.
13.99% p.a.
$55
0% p.a. for 28 months on balance transfers requested at card application. 0% balance transfer fee applies. Rate then switches to applicable variable cash advance rate. New cards only, Eligibility criteria and T&Cs apply. Offer ends September 28th 2021.
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13.99% p.a.
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0% p.a. for 28 months and then 21.49% p.a.
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21.49% p.a.
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55
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3.00%
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$55
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$15.00
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2%, Min $2.50
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Apply By 07 September 2021
Westpac Low Rate
0% p.a. for 28 months and then 21.49% p.a. (1.00% balance transfer fee)
13.74% p.a.
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13.74% p.a.
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0% p.a. for 28 months and then 21.49% p.a. (1.00% balance transfer fee)
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21.49% p.a.
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55
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0.0
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3.00%
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$59 $0 in the first year
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$15.00
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