Four new year’s financial resolutions to kickstart 2021

Four new year’s financial resolutions to kickstart 2021

There are so many new year’s resolutions you could make going into 2021, but have you considered including financial resolutions? Sure, it’s not nearly as fun as promising to travel more or start a new hobby, but it can just as easily transform your life and create healthy habits for the future.

Whether you’re struggling with debt, scared to try new things or have kept your finances on autopilot up until now, here are four new year’s financial resolutions to kickstart your 2021.

1. Ditch credit card debt for good

If you’ve got a maxed-out credit card debt weighing on your shoulders, one of the best resolutions you can make is to commit to paying it off in 2021. Minimum repayments aren’t enough and can see your credit card debt snowball out of control. So, it’s time to set a plan into motion.

Look at your credit card debt and look at your budget, then sincerely answer the question of how much you could commit to putting on to your debt each week/fortnight/month for the next 12 months. Could you skip out on one subscription service to help this? Can you try doing free workouts off of YouTube as opposed to a class membership? Perhaps you have a few old things you could sell for extra cash? Sacrifices sometimes have to be made to get on top of debt.

You may also want to consider if a balance transfer credit card may suit your financial needs. As a standard credit card will continue to accrue interest on your outstanding balance, a balance transfer card with a zero per cent introductory offer may create some much-needed breathing room. You may be able to pay down your debt without adding more to it from pesky interest charges.

2. Dabble in fintech

Are your finances still sitting comfortably in analogue while your friends and family keep encouraging you to enter the digital world? This year could be the year you dabble in fintech (and we promise it’s not as scary as it seems).

Here are some of the easiest ways to step into the world of fintech without being overwhelmed:

  • Round-up savings tools. For every purchase you make, some apps will round this up to the nearest dollar (or more) and deposit this “spare change” into a savings account. Many institutions also offer this handy feature inbuilt into their savings accounts, you just need to switch it on. This includes ING, Up and Bank Australia.
  • Contactless payments. In this Covid-19 age, the need for contactless payments has increased in our daily lives, and digital wallets have been a lifesaver for this function. A digital wallet can be an app or platform on your phone or computer that works as your wallet by securely storing your card details. And thanks to digital wallets like Apple Pay and Samsung Pay, all you really need nowadays to make contactless purchases is a compatible smartphone.
  • Wearable technology. Speaking of contactless payments, ever wanted to make a purchase after a work-out or a beach swim, but realised you’ve not got your wallet on you? This is where wearable technologies come in. Using contactless payment technology, some wearables allow customers to tap-and-go for purchases using a raft of everyday items, including rings, watches, pins and gym towels.

3. Improve your credit score

Whether you’re looking to get a home loan or nab a credit card, or if you’ve never thought about your financial reputation before, 2021 could be the time you work on your credit score.

Credit score is a number attributed to you by a credit reporting agency based on your credit report. Your credit report is a detailed look at your credit history, meaning any credit products you’ve applied for, been rejected for or are currently using. It also may include any utilities bills you’re on and your current phone plan.

An excellent credit score means you’ll be more likely to be approved for financial products, as it showcases to banks that you’re a responsible customer. A poor credit score may mean that you’re more likely to be rejected for products due to issues in your past or even mistakes on your report.

Here are some ways you may be able to improve your credit score in 2021:

  • Check your credit report for errors
  • Don’t make multiple applications for financial products
  • Pay off your existing debts
  • Grow your savings
  • Avoid making late payments

4. Nab a lower home loan rate

While this resolution may not apply to everyone, 2021 may be a good year to consider grabbing a lower home loan rate. The home loan market is currently experiencing the lowest interest rates it’s had on record. Meaning, that if your home loan lender is charging you through the nose in interest, you’ve never had more bargaining power to nab a lower rate.

The first place to start is with your current lender. Find your current interest rate and then make a list of reasons why you’re an ideal borrower. This may include that you live in the property, own at least 20 per cent of the property, are employed full time or are paying principal and interest.

Then, hop online and take a look at what your current lender is offering new customers. Generally speaking, lenders will reserve their lowest interest rates for new customers to get them onto their books. Also, using comparison tables, take a look at what competitors are offering customers like you and keep a shortlist.

Now, pick up the phone and call your lender. Present all your research, including that you’re an ideal customer, you know your bank offers customers lower rates and that there are better deals out there. Finally, request that your lender lowers your rate.

If your lender won’t budge, drop the words “mortgage discharge form”. This can help to show that you’re serious and may encourage them to drop your rate to keep your business. If your lender still won’t lower your rate, you now have a shortlist of new lenders with more competitive rates that you could consider switching to.

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Fact Checked -

This article was reviewed by Senior Journalist Tony Ibrahim before it was published as part of RateCity's Fact Check process.

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Learn more about bank accounts

Can I start a bank account online?

Yes, most lenders that operate in Australia will let you set up a bank account online. The process is usually simple and takes five to 10 minutes. 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 identification. Requirements differ from lender to lender, so some institutions might ask for more or different forms of ID.

Can you open another account at the same bank?

Yes, you can open another account at the same bank if you already have an account there, but some banks place a limit on how many specific accounts you can open.

Generally, though, it is possible to have more than one everyday account, one personal account and one joint account, or have different types of accounts – such as a transaction account and a savings account.

Keep in mind that some bank accounts come with fees, so you could be charged twice for having two types of the same account at the same bank.

Also, if you have more than one high-interest transaction account at the same bank, only one account will be able to earn the highest rate of interest.

Can foreigners open bank accounts in Australia?

Many Australian lenders allow foreigners to open bank accounts in Australia. Often, this can be done before you arrive in the country – with no Australian address required. When you get to Australia, you can pick up your debit card, using your passport as identification.

Can you deposit money into somebody else's bank account?

One of the easiest banking tasks in the world is depositing money. You can even deposit money into someone else’s bank account if you wish.

The basic information you need to deposit money into a third-party bank account is:

  • Payee’s name
  • Bank, building society or credit union (though this isn’t necessary)
  • BSB (or bank code, which is the branch identifier)
  • Account number

Including the name of the financial institution isn’t necessary – particularly with online banking – because the BSB will identify this for you.

A handy tip is to record yourself (or add a personal message) in the transaction description or reference. This will show up on the recipients account, letting them know who’s paid them the money.

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 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.

Can I close my bank account over the phone?

In most cases, you can close a personal or business bank account over the phone. In fact, this is the best way to ensure you’ve closed an account properly.

By speaking to a banking representative, you can capture and close out any pending transactions, or interest owing/payable on the account being closed.

In the instance where the account is a joint account, or you have multiple bank accounts you want to close, your bank may send you a form that you need to fill out and return.

Either way, you would be advised over the phone of the steps you need to take. Calling your bank ahead of closing an account is often a smart course of action.

Can I open a bank account in another country?

Despite having a bad rap for facilitating tax evasion, it is possible and legal to open a bank account in another country, also known as an ‘offshore account’.

Some people choose to open a bank account in another country to invest overseas, for higher interest-earning potential or to access foreign banking services.

The process for opening an offshore bank account differs depending on the financial institution and country in which you’re opening the account.

Typically, you will need to provide identification such as a passport, a local bank statement and a signed declaration proving the source of the money being used to open your account. Usually, deposits into offshore accounts can be made by international money transfer.

Can I have a PayPal account without a bank account?

You don’t need a bank account to send or receive money through PayPal. However, you do need a bank account if you want to withdraw money from your PayPal account.

How do you open a bank account under 18?

If you’re under 18 and you want to open an Australian bank account, you will need your passport or birth certificate. (Some lenders might require just a Medicare card or driver’s licence.) You can apply online or at a branch. If you’re 13 or under, you will probably need a parent to accompany you to a branch.

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.

How to transfer money to another bank account

Transferring money to another bank is often called a bank transfer, and it can be done a few different ways.

Customers generally need three pieces of information to transfer money to another bank account. Customers need the account name, BSB and account number of the account they wish to transfer money to.

One way of transferring money to another bank account is in a branch with the help of a staff member; they will often give you a receipt as well as confirmation of the transfer.

Transfers can be also made via internet banking and phone banking.

Some banks also allow customers to make transfers via partnered ATMs, especially if the account is with the same bank.

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.

What do I need to open bank accounts online?

Opening a bank account online is a simple process and only takes between five to 10 minutes to complete. To get started you will need a computer or smartphone with internet access.

Information to have available when you’re ready to apply is:

  • Identification (such as driver’s licence, birth certificate, passport, proof-of-age card)
  • Tax file number
  • Residential address, email and a contact number

In some cases, you might be asked to provide employment details. If you’re not able to verify your identity online, most financial institutions let you provide this in the branch at a later date.

There are some types of bank account that you can apply for only in a branch. However, most bank accounts can be applied for conveniently online.