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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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This article was reviewed by Finance Writer Alison Cheung before it was published as part of RateCity's Fact Check process.



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Learn more about bank accounts

How can I deposit cash into my bank account?

The traditional way to deposit cash into your bank account is to go to a branch and give it to a teller. These days, many banks will allow you to make deposits through an ATM as well.

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.

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.

Can debt collectors take money out of your bank account?

Many people find themselves struggling to cope with debt at one time or another. In these cases, a debt collector could contact you to demand payment for a debt, to explain the consequences of you failing to pay a debt, or to organise alternative payment arrangements.

If you’re contacted by a debt collector, you may be wondering what their rights are and whether they can take money out of your bank account.

Creditors cannot access money in your bank account unless a court order (also known as a ‘garnishee order’) is made to allow creditors to recover debt by taking money from your bank account or salary.

If this happens, the creditor can take money out of your bank account unless you pay the debt in full or make an alternative payment arrangement such as paying in instalments through the court.

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 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 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 can I close a Commonwealth Bank account?

You can close your Commonwealth Bank account at any branch, provided you have appropriate identification. You can also close your account over the phone, by calling 132 221, 24 hours a day.

Can foreigners open bank account in Australia?

If you’re migrating, studying or working in Australia, you’ll be pleased to know that you can open an Australian bank account. For the most part, opening a bank account in Australia is a simple process which starts by comparing the types of bank accounts foreigners can open in Australia.

Once you’ve found a bank account that suits your needs, you can start the application process.

When you apply for the account, you’ll need to provide proof of ID which may include your passport, overseas ID or credit card. You may also need to provide a copy of your visa and proof of address in Australia.

Depending on the bank and the type of account you choose, you may be able to apply for the account online or over the phone before you arrive in Australia.

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.

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.

How do I overdraw my Commonwealth Bank account?

Overdrawing a bank account can happen by accident. It’s often hard to know what your balance is, particularly with direct debits, scheduled repayments and pending transactions competing for cash.

To avoid being stuck with a bank fee every time your account is overdrawn, you can apply for a personal overdraft. This will enable you to overdraw your account up to an approved amount.

A personal overdraft is connected to your CommBank Everyday Account, so you can enjoy easy access to extra funds once approved – anywhere from $100 up to $20,000.

Your overdraft funds can be accessed via your CommBank keycard or Debit MasterCard, or online through NetBank and the CommBank app.

To apply you can either call the Commonwealth Bank directly or visit your local branch.

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.

Can you open a bank account at 16?

Yes, you can open a bank account at 16, or even younger. If you’re 13 or under, you will probably need a parent to accompany you to a branch.