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 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 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 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.

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 can I wire money to a bank account?

You can wire money to an Australian bank account either through your own bank or by using a money transfer company such as Western Union or MoneyGram. Either way, you’ll need the other person’s name, BSB number and account number. If you use a money transfer company, you might also need to provide the recipient’s address for large payments.

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.

How do I close a bank account?

Closing a bank account is one of those tasks that’s easy to put in the too-hard basket. There are quite a few steps involved, some which may require you to hang on the phone for a while.  

Here’s a handy checklist of items to tick off, so the job gets done quicker. If you don’t do your banking online, the following steps can also be done at a branch.   

  • Cancel any scheduled or recurring payments
  • Update your direct debit details (such as loan repayments) with creditors
  • Export your payee address book (to keep a record of saved third-party bank account details)
  • Transfer the balance of your account (to the new bank account)
  • Close your account online, or by calling the bank or visiting a branch

How do I open a bank account for a baby?

If you’ve just welcome a new baby into the world, congratulations. Opening a bank account for your child can be a wonderful first gift.

Before you can open your child an account, you’ll need to have a birth certificate or passport for your baby.

As the parent or guardian, you’ll also be listed as a joint holder on the account. This means you’ll need to have proof of your identification and address (a driver’s licence, passport, birth certificate or Medicare Card).

Many banks and credit unions offer baby banks accounts. Usually, you can apply online; otherwise you can head into a local branch or office with your documents.

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.

Are bank accounts frozen when someone dies?

Yes, Australian bank accounts are frozen when someone dies. If you want to close the account of somebody who has died, you might have to provide proof of death and a copy of the will. You might also have to prove your relationship to the deceased person.

If you have a joint bank account with somebody who has died, you will generally be entitled to all the money in the account. Again, you might have to provide proof of death if you want to change the bank account from a joint account to a one-person account.

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.