The global coronavirus pandemic is affecting every aspect of Australian life. Schools are closing, office employees are working from home, and supermarkets are struggling to keep up with demand for essentials.
As well as affecting your health, COVID-19 could also affect your finances. Here are a few things you could do to help protect yourself, your loved ones, and your money.
Check your interest rates
At its March 2020 meeting, the Reserve Bank of Australia (RBA) decided to cut the nation’s cash rate to a new record low of 0.50 per cent. RBA governor, Dr Philip Lowe, said that while Australia's economy was previously recovering from downturn, the effect of coronavirus on international economies meant another rate cut was necessary.
Many of Australia's leading banks immediately passed the full rate cut on to their mortgage customers, though some only offered discounted interest rates to new customers. Some banks also cut the bonus rates on savings accounts, making it harder for everyday Australians to earn interest on their wealth.
Consider checking the interest rates on your mortgage and/or savings account, and comparing alternatives to see if there are other options that could better suit your needs.
Find out if you can take a payment holiday
If you or someone you work with catches the virus, you won’t be able to safely go to work, and you may need to self-isolate for a period of time. If you don’t have the option to work from home, or if you have a job where sick leave isn’t available (e.g. casual workers and contractors), being unable to work and earn income means you may struggle to pay your bills (though some employers, such as Woolworths, have pledged to support their casual workers impacted by the pandemic).
Internationally, banks are offering financial relief to COVID-19-affected areas by halting repayments on mortgages and other loans. Italy’s deputy economy minister, Laura Castelli, said that mortgage payments would be suspended across Italy while the nation is under lockdown due to its outbreak. And in the UK, several banks have offered repayment holidays, such as the Royal Bank of Scotland offering to defer mortgage and loan payments for up to three months for affected borrowers.
Australia’s banks haven't yet gone quite as far as those in Italy and the UK, but have offered financial assistance to customers affected by coronavirus, similarly to the assistance packages offered following the January 2020 bushfires.
Following a recent meeting, the Australian Banking Association (ABA) announced that businesses and individuals affected by COVID-19 may be able to apply for assistance from its members, to be assessed on a case by case basis, which could include:
- Deferred loan repayments
- Waived fees and charges
- Interest free periods or no interest rate increases
- Debt consolidation to help make repayments more manageable
The Commonwealth Bank has outlined specific measures to assist its customers, including implementing safety measures at its branches (which remain open for business) and offering assistance to customers unfamiliar with digital banking. Small and medium business customers may also be able to receive support, including deferred payments and waived fees on business loans, as well as waived merchant terminal fees for impacted customers with CBA payment terminals for up to 90 days.
The Australian Taxation Office (ATO) has also announced measures to support businesses affected by COVID-19, including deferring selected payments by up to four months.
If you or your business is being affected by coronavirus, and you may not be able to afford your bills, consider contacting your bank (or your landlord, or your gas, electricity, phone or internet provider) to work out a hardship plan before any payments become overdue and you risk a default.
Rethink your travel plans and check your insurance coverage
To help limit the spread of coronavirus, international and domestic travel restrictions have been put in place for areas that have experienced outbreaks. Australia has placed Do Not Travel alerts on China and Iran, as well as parts of South Korea and Italy. Australia is also understood to be considering extending travel restrictions to the rest of Europe, following in the footsteps of the USA.
Fears of coronavirus spreading through large crowds have also led to several major events being shut down or called off, including conventions, festivals and concerts, such as Tasmania’s Dark Mofo festival.
If you have pre-booked travel plans or event tickets, it’s important to consider the risk that your trip could be affected by travel restrictions or event cancellations, and the potential impact on your budget if your travel plans need to be called off at the last minute. While many credit card companies offer complimentary travel insurance if you book flights or accommodation using a credit card, these policies may not cover complications arising from natural disasters, including epidemics and pandemics. Check your card’s terms and conditions, and consider contacting the card provider and the airline/hotel/event organiser to see what can be done about the situation.
Consider going cashless
As well as washing your hands and avoiding touching your face, another hygiene practice to consider while coronavirus is at large is to temporarily give up paying for goods and services with shrapnel or the folding stuff.
Studies have shown that coins and banknotes can serve as disease vectors, changing hands several times a day to spread germs far and wide. As COVID-19 can spread via respiratory droplets from coughs and sneezes, it’s possible that cash handled by an infected person could carry and spread the virus.
There are reports that currency in parts of China is being cleaned or taken out of circulation to help contain the spread of the virus, and that after a brief closure, the Louvre Museum in Paris stopped accepting cash from visitors.
If you’re concerned about the risk of catching a virus from dirty money, you could consider switching to tap and go payments with your debit or credit card, or using contactless smart pay apps via your smartphone or smart watch. Just be sure to keep washing your hands and practicing good hygiene when handling your cards and devices.
Consider your superannuation choices carefully
With global share markets and investments being affected by coronavirus, there are concerns that this volatility could also affect Australia’s superannuation. If you’re worried about the safety of your retirement savings, you may be tempted to switch super funds, or even try to access the money early.
However, it’s also important to remember that superannuation is a long term investment. If there’s still a long time before you plan to retire, it’s possible that your super fund will eventually recover from any recent losses due to coronavirus volatility, depending on how the assets are invested.
If you’re thinking about switching super funds or consolidating your smaller super accounts, it’s important to compare different fund options. Look carefully at their past performance (though this does not reliably indicate future performance) and fees, as well as their investment strategy, before making your decision.