Wednesday, 13 April 2016
Posted by Rebeccah Elley
If someone asked me, how to describe myself financially I would reply without hesitation “I’m one thrifty penny pincher.” I track my spend on a budget app, put money away each month into a high interest savings account and try to cut back where I can by bringing lunch to work and catching public transport over driving.
But recently a few money drains have come to my attention, that I quickly realised are adding up to big bucks over the year. Check out the below to see if you, like me are being caught out by these financial mistakes:
I’ve developed a bad money habit - when it comes to the end of my pay cycle, my plastic is whipped out on a far more frequent basis. Apparently I’m not alone, as Money Smart data shows the average credit card balance in Australia is currently a high $4,300.
The savings that could be made by ditching credit card interest? Well, if you have a credit card with the average rate of 17.41%, moving that debt over to a card with a 0% balance transfer offer for 12 months, would save you $416 in interest (assuming you pay down the $4,300 balance within the BT period).
I’ve had the same bank account since my first job at Burger King. When I was a student I enjoyed fee free banking but those days are sadly behind me and now I’m being hit up with a $4 monthly account keeping fee.
While it might not seem like much, over a year that adds up to a significant $48 and when you consider there are 87 bank accounts in the Mozo database completely free of the bite of ongoing charges, putting a plug in this money drain is definitely a no brainer.
ATMs in pubs, clubs and convenience stores are notorious for charging $2.50 per cash withdrawal (sometimes more!). Even if you only make one of these withdrawals once a week, over a year that adds up to $30 from your hip pocket.
A way of avoiding the bite of ATM fees, is signing up with a bank account that comes with a wide ATM network like ME with its Everyday Transaction Account which gives you fee free withdrawals within the ME, Westpac, St.George, BankSA and Bank of Melbourne networks and at the time of writing will also refund you any ATM fees charged by other banks.
Whether you’re jetsetting overseas, shopping online at international stores or looking to send money abroad to a loved one back home, don’t fall into the trap of paying exorberant foreign exchange fees. I’ll give you an example of how I got caught out: I recently bought return flights overseas for me and a friend and was charged a whopping international money transfer fee of $71 by my card provider.
So if you’re planning on transferring money overseas, use our foreign exchange comparison tool to compare exchange rates side by side or for those jetsetting on holiday, find yourself a competitive travel money deal here.
Okay, I don’t have a home loan but I thought I’d throw this one onto the list for all those homeowners out there. Being loyal to the same mortgage provider over a 25 to 30 year can be a major money drain, as the great rate you received when you took out the loan is unlikely to remain competitive over the entire life of the loan. That’s why it’s important to give your home loan a health check every few years to ensure you’re signed up with a competitive deal and if you’re not make the move and refinance.
Quick example: A homeowner with a $500k home loan switching from the average big four rate of 4.82% to a low rate like Bank Australia’s Basic Home Loan’s 3.98% would reduce their repayments by $237 each month (a saving of $2,844 each year!).
Are there any money drains I’ve missed? Share in the comments below!