Best ways to pay for something you can't afford

Best ways to pay for something you can't afford

Say you don’t have the cash on hand for something you want to buy – does that mean you can’t afford it? Let’s look at some of your options.

Things like a debit card linked to your account, contactless payment or online payment are all ways of paying money that you already have. What we’re talking about here is when you don’t already have the money to finance a purchase. These include:

  • Credit cards
  • Gift cards and vouchers
  • Lay-by
  • Afterpay and zipPay
  • PayPal

Credit cards

Credit cards allow you to buy something on the spot, whether or not you have the cash to pay for it. To obtain a credit card you must fill out an application with your bank or financial institution.

Credit cards certainly make purchasing easier. However, you need to remember that you are still spending money when you use your card, and will have to pay the bill when it arrives. If you don’t pay the full amount by the due date, then you will be charged interest – meaning it’s easy to end up owing more than you intended.

Gift cards and vouchers

Gift cards, vouchers and store cards all basically serve the same function. You use them like a pre-paid credit card. Money is pre-loaded on the card and it can be used until all the money is spent. The difference between these sorts of cards and pre-paid credit cards is that they can only be spent at the store they were issued at.

Lay-by

A lay-by agreement is one that allows you to you buy something and pay for it in several instalments before taking it home. You won’t be allowed to take it home until it is completely paid for. You’ll usually pay 10-20 per cent as a deposit (and any deposit you pay is an instalment). You must get a copy of your written lay-by agreement that states all terms and conditions, including any termination fees that may apply.

Lay-by can be a useful way of spreading payment of purchases over a longer period, to help your budget cope. However, there are drawbacks to consider, like:

  • Large department stores often charge service fees (although many smaller retailers might not)
  • Large department stores may also keep your deposit (up to 20 per cent) and the service charge if you cancel your lay-by
  • Your lay-by is always locked in at the original price for the product, so if it later goes on sale, you miss out on the lower price
  • If the store goes into receivership before you’ve finalised the lay-by, you will probably have lost the item and you may become an unsecured creditor, meaning you become the last in line to get your money back

Remember these tips to helps protect your rights:

  • Before you sign the agreement and pay any deposit, make sure you read and agree with the terms and conditions, including payment dates, amounts and any extra charges you’ll have to pay if you decide to cancel
  • Keep copies of the agreement and receipts for the deposit and all instalments, so you’re covered if there is a problem later

Afterpay and zipPay

Afterpay is a system similar to lay-by. It offers online shoppers a simple instalment plan, allowing them to pay for purchases in four equal instalments, which are due every fortnight. When you shop from a store in Afterpay’s online Shop Directory, you then choose Afterpay as your payment method at checkout (like PayPal). First-time customers must provide payment details to set up an account.

After you check out, the goods will be shipped to you by the seller. You can log in to your Afterpay account to see your payment schedule, and/or make a payment before the due date. Otherwise, the instalments will automatically be deducted from your debit or credit card every fortnight.

There is no fee to you when you’re purchasing. The only fees applied are late fees if your scheduled payments are unsuccessfully processed and you fail to make your payment via a different method. 

zipPay is basically identical, except that you can pay weekly, fortnightly or monthly, giving you more flexibility than the fortnightly system used by Afterpay.

PayPal

PayPal pays the seller on your behalf when you purchase, and then retrieves the money from you. You will be required to link a credit card or bank account to PayPal when you create you first create your account.

If you have enough money in your PayPal or linked bank account to cover a purchase, then it will simply be deducted. If you don’t, PayPal will make two attempts to complete the transaction from your bank account before switching to your backup funding source.

Your bank may charge you fees for each failed attempt, so you should immediately add sufficient funds to your bank account so that the payment is successful on the first attempt.

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Learn more about bank accounts

How do I transfer money from Paypal to my bank account?

Transferring cash from Paypal into your bank account is simple…if you have a Paypal account that is.

Once you’re logged into your Paypal account, the account balance will appear on your home page. Below your balance are two options:

  • Add money
  • Withdraw money

Choose option two if you want to transfer money from your Paypal account to your personal bank account.

The next screen will prompt you to either enter new bank account details or choose a bank account that’s connected to Paypal. You can always add more bank accounts to your Paypal profile.

Another way to transfer out of Paypal is by jumping to the wallet tab on the top menu, and clicking ‘transfer money’. Both options will give you the same result.

Can a debt collector garnish my bank account?

A debt collector can garnish your bank account, but only with a court order. This drastic action is usually taken only if you’ve ignored several notices asking you to pay the debt.

If this happens, there is nothing you can do to stop it other than immediately pay back your what you owe in full or make arrangements to pay it off in installments.

Once a garnishee order is issued, your bank will put a freeze on your account as it processes the order. This usually takes two to three days and you won’t be able to access any of your money during this time.

If you have Centrelink payments, they may be protected, depending on what the court order says.

Do I need to open a business bank account?

Just because you’re in business doesn’t necessarily mean you need a business bank account. You could be a sole trader not registered for GST, and use your personal bank account for business.

If you do want a business account, there are plenty of benefits attached to business transaction and savings accounts, as well as business term deposits.

There are business bank accounts designed for businesses with a high volume of transactions, and those for start-ups with a small amount of trade. You could also include an EFTPOS service with your account.

Some business bank accounts charge for the number of transactions per month, while others offer a pay-as-you-go fee structure, where you only pay fees for transactions you make.

It’s up to you whether your priority is mainly transactions, or earning the maximum amount of interest on your principal. There’s a business banking solution for you if you need one.

Can I set up a bank account online?

Most Australia-based lenders will allow you to set up a bank account online. Requirements vary from lender to lender, but you will probably need to provide a passport or birth certificate, as well as a driver’s licence, Medicare card or another form of secondary ID.

Can I close a bank account with pending transactions?

You can close a bank account with pending transactions. But after the account is closed, any incoming transactions will be declined by your (old) bank.

The best way to ensure this doesn’t occur is to either wait to close your account until all pending transactions are complete, or contact the creditor and supply them with alternate bank details.

If you’re unsure whether you have any scheduled transactions, you can speak to a banking representative over the phone or via online support.

In most cases, your bank withholds the amount owing for pending transactions (such as online purchases).

Because the pending amount is deducted from your bank balance, you can close your bank account and the purchase will be honoured.

How can I find bank accounts in my name?

To find ‘live’ bank accounts in your name, you’ll have to ask individual lenders, which involves contacting them one by one and proving your identity each time. To find ‘unclaimed’ bank accounts (those that have been inactive for at least seven years), you can use this website.

What do you need to open bank accounts?

Opening a bank account is one of the simplest online tasks you could perform. The hard part is deciding which type of bank account you want to open.

All banking institutions have a website where you hit ‘apply’ on the account of your choice and step through an application in less than 10 minutes.

Here’s a list of information that is generally required for applications.

  • Identification (driver’s licence, passport, proof of age card, proof of citizenship and/or birth certificate)
  • Tax file number (so you don’t get charged the highest tax rate)
  • Address, contact email and phone number

If you decide to open a new account at the branch, make sure you ask beforehand what information you need to take with you, or take all of the above to be safe.

How can I check my bank account balance online?

Checking your bank account balance online is a simple process. Once you’ve logged in to your online banking, clock on the relevant account and the balance should be visible.

How can I close an ANZ Bank account from overseas?

There are two ways you can close your ANZ Bank account from overseas:

  • Call +64 4 472 7123 (toll charges apply)
  • Send a bank mail request via ANZ internet banking

Can you find your bank account number online?

If your bank offers online services, you should be able to find your bank account number online by logging into your account on your bank’s website and checking your details there.

Keep in mind that each type of account you have with a bank comes with a unique account number. This means if you have a bank account as well as a savings account, for example, your bank account number and your savings account number will be different.

If you don’t have access to your bank account online or can’t login, you should be able to find your account number on a mailed bank statement, if you have one.

Alternatively, you can call your bank’s customer service number or visit a branch to retrieve your account number.

How do I open a bank account for a child?

There are few better ways for a child to learn about money management than through savings. And there’s a plethora of bank accounts designed specifically for young people and children.

A bank account for a child can be opened online, over the phone or in a branch in a few easy steps. The minimum age a child can open a bank account for themselves usually ranges between 12 and 14.

If the child is too young to open the account, you can do it for them as their legal parent or guardian. 

To do this, you would need to be over 18, have an Australian residential address and currently reside in Australia (or have proof of residency).

You would also need to provide:

  • Identification for yourself and the child
  • Your tax file number (TFN) or TFN exemption

Depending on the bank account, you might be able to choose what level of access the child has to their bank account (online and via the phone).

How do you set up a bank account online?

Once you’ve compared bank accounts and found the right one, the process of opening a bank account online is quite simple and can be done in around 10 minutes.

To set up a bank account online, you’ll need to prove your identity and provide an approved form of ID as well as your tax file number (TFN).

If you’re a new customer of the bank, you’ll need to verify your identity and potentially upload documents before you can complete your online application.

Once your ID has been verified and you’ve set up your bank account online, you should receive your bank cards in the mail along with your PIN and any other account details.

How do I open a bank account if I'm under 18?

The good news for savvy young folks like you wanting to take charge of your finances is that there are many bank accounts available for under-18s.

For bank accounts that require you to be 18 or older, you’ll have to rope in a parent or guardian to open the account for you.

Otherwise, you can apply by yourself online or at the branch of the bank, credit union or building society that has the account you would like to open. 

If applying online, you might be asked for a form of identification. For under-18s, this could be a Medicare card you’re listed on, your birth certificate and/or your current home address.

In most cases, you can verify your identity online (at the time of applying) or at the branch afterwards.

How do you transfer money from PayPal to a bank account?

Transferring money from PayPal to an Australian bank account is simple. Just follow these three steps:

  • Go to your Wallet
  • Click ‘Transfer Money’
  • Follow the instructions

The money will take three to seven business days to reach your bank account.

Once you’ve made the transfer request, it can’t be withdrawn.