How to protect your personal finances from coronavirus

How to protect your personal finances from coronavirus

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.

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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.

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 deposit change into your bank account?

One way to deposit change into your bank account is to visit a branch. Many lenders will also allow you to deposit your change through one of their ATMs.

Do you need a bank account to sell on eBay?

You don’t need a bank account to sell on eBay. But if you don’t have a bank account, you must provide either a credit card or debit card.

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.

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 open bank accounts for my children?

A common question for new parents is, ‘Can I open a bank account for my child?’

The short answer is yes – as a parent you can open a bank account for your child.

Once you’ve compared your options and found a bank account that suits your needs, the process is relatively simple.

As the bank account is for your child, you’ll need to provide some documentation such as proof of ID, including your tax file number.

You will also need a copy of your child’s birth certificate, and in some cases you may also need to sign a guarantee of indemnity.

Depending on the bank and whether you’re an existing customer, you may be able to open a bank account for your child online. However, you may still need to go into a branch to prove your identity.

Do you need a bank account to get a credit card?

To get a credit card, you need to show proof of income, which will almost certainly require you to have a bank account.

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.

How do you open a bank account in Australia?

Opening a bank account in Australia is usually a straightforward process. Some banks give you the option of opening an account online, while others require you to visit a branch.

Different bank accounts offer different features, so it’s best to compare your options to find one that suits you.

All banks require you to pass an identity check to open a bank account. Australia uses the 100-point identification system, which means you’ll need to show a number of forms of ID that, together, add up to 100 points.

Common ID types include a driver’s licence, passport, Australian visa in a foreign passport, and Australian Medicare card. You’ll find out what types of ID are accepted when you go through the sign-up process online or at a branch.

Once your account is open, you’ll be given or sent a debit card that you can use to make purchases and withdraw money from your account.

How do I close my bank account online?

You can usually easily open a bank account online, but you often can’t close it online.

Many banks and credit unions will only let you close an account if you go into a branch or call them on the phone.

However, some banks will let you request to close the account via your internet banking. Check your financial provider’s website for details.

Just remember: If you still have funds in the bank account, transfer them to another account, or withdraw the cash. Also, if you have any payments like direct debits going in or out of the bank account, these will also stop when you close your account.

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.

What do I need to open a company bank account?

To open a company bank account, you will probably have to provide 100 points of ID, an ABN and an ACN. You will probably have to provide the details of all signatories as well.

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