8 tricks to cut down the cost of Christmas

8 tricks to cut down the cost of Christmas

 

This year, Aussies are expected to spend $11 billion over the silly season. Many of us will already be feeling the financial pinch with only a few weeks left until Christmas. 

RateCity has compiled a list of eight ways you can cut down the cost of Christmas: 

  1. Shop on Boxing Day

Last year, the National Retail Association predicted Australians would spend up to $2.8 billion in the Boxing Day sales, a figure that increased 5 per cent from 2015. If you’re not seeing some friends and family until after Christmas, then save the shopping for the Boxing Day sales. If you’re prepared to cut corners this Christmas, you’re prepared to battle it out in the sales crowds for a bargain. 

  1. Zero interest credit cards

Many leading credit card providers are offering zero per cent credit cards to lure in new customers around the Christmas season. Virgin Money have announced they are extending the interest free period on their Velocity Flyer card from 12 to 14 months, and you can also expect 13 months interest free with a Bankwest Breeze or Breeze Premium Mastercard. 

Zero interest credit cards may be a great resource if you need extra time to pay for those one off or big purchases, like a holiday or a new television, that would otherwise cut into your Christmas budget. It is important however, that you ensure you pay off your debt in full by the end of the free introductory period, so you don’t overspend and fall into debt. 

  1. Do your online shopping in one place

If you’re more of an online shopper than someone who ventures to the shopping centre, ensure you’re limiting the variety of online stores to minimise pesky fees. Australians in particular know the trouble that currency conversion, shipping and delivery fees can cost, particularly when ordering from an overseas retailer. Try to do as much shopping in one spot, even utilising the newly launched Amazon Australia, to cut down on unnecessary costs. 

  1. Agree on a spending limit

If your friends or family are also looking to cut down on the Christmas expenses, suggest a spending limit for presents. You’d be surprised just how resourceful, creative and heartfelt you can be when you’re given a $20 limit for your nearest and dearest. 

  1. Recycle old gifts

Perhaps your work gave you a bottle of wine as a thank you gift, or you were given another mug by a distant relative and have no room for it. Why not recycle these gifts and give them to someone else? 

With caution, of course, as you don’t want to re-gift something to the gift giver. Avoid trouble by ensuring you never re-gift something handmade, try to re-gift outside of your circle of friends and only re-gift new and unused items. 

  1. DIY time 

If you’re crafty, or have a talent, consider sharing it with your loved ones as a present. There’s nothing more thoughtful than a handmade, meaningful gift, whether it be the most basic Pinterest creation or an artistic watercolour painting. This will help you to save money on new items, and show that you cared enough to put a lot of effort into their present, instead of just swiping your credit card. 

  1. Buy smaller presents in bulk

Looking for cheap stocking stuffers, or small gifts for acquaintances? Buy in bulk from warehouses like Costco, who are 27 per cent cheaper than Coles, and 24 per cent cheaper than Woolworths on average. Pick up a bulk number of smaller items such as chocolates or soaps, and then attach a ribbon or wrap them individually, creating an extra level of thoughtfulness. 

  1. Use apps to stay organised

We’re all guilty of letting our disorganisation and procrastination cost us. One of the most annoying ways we waste money is by panic purchasing items we don’t really need as the days tick closer and closer to Christmas. Using apps such as ‘Santa’s Bag’ helps you to stay on top of the gift buying process. The app allows you to plan gifts for each recipient, set gift quantity limits and set and track your budget to ensure you’re not overspending.

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Learn more about credit cards

How to get a free credit card

There's no such thing as a free lunch. All credit cards come with associated costs when used to make purchases, even if it’s simply the cost of making repayments.

However, many lenders offer incentives for customers such as a $0 annual fee or 0 per cent interest on purchases during an introductory period. Additionally, paying off your balance in full during an interest-free period means you could only have to pay back the cost of purchases without interest. You could also be eligible for additional rewards such as cashback during that time, saving you more money.

How do you use a credit card?

Credit cards are a quick and convenient way to pay for items in store, online or over the phone. You can use a credit card as a cashless way to pay for goods or services, both locally and overseas. You can also use a credit card to make a cash advance, which gives you the flexibility to withdraw cash from your credit card account. Because a credit card uses the bank’s funds instead of your own, you will be charged interest on the money you spend – unless you pay off the entire debt within the interest-free period. If you pay the minimum monthly repayment, you will be charged interest. There are many different credit card options on the market, all offering different interest rates and reward options.

What is a balance transfer credit card?

A balance transfer credit card lets you transfer your debt balance from one credit card to another. A balance transfer credit card generally has a 0 per cent interest rate for a set period of time. When you roll your debt balance over to a new credit card, you’ll be able to take advantage of the interest-free period to pay your credit card debt off faster without accruing additional interest charges. If your application is approved, the provider will pay out your old credit card and transfer your debt balance over to the new card. 

How do you use credit cards?

A credit card can be an easy way to make purchases online, in person or over the phone. When used properly, a credit card can even help you manage your cash flow. But before applying for a credit card, it’s good to know how they work. A credit card is essentially a personal line of credit which lets you buy things and pay for them later. As a card holder, you’ll be given a credit limit and (potentially) charged interest on the money the bank lends you. At the end of each billing period, the bank will send you a statement which shows your outstanding balance and the minimum amount you need to pay back. If you don’t pay back the full balance amount, the bank will begin charging you interest.

How to calculate credit card interest

Credit card interest can quickly turn a manageable balance into unmovable debt. So being able to understand how interest rates translate into dollars is an important skill to acquire.

The common mistake people make is focusing on the credit card’s annual percentage rate (APR), which often sits between 15 and 20 per cent. While the APR does provide a rough idea of how much interest you’ll pay, it’s not entirely accurate.

This is because you actually accrue interest on your balance daily, not annually. So, you need to work out your daily periodic rate (DPR). To do this, divide your card’s APR by the number of days in a year (e.g. 16.9 per cent divided by 365, or 0.05 per cent). You can then apply this figure to the daily balance on your credit card.

What is a credit card?

A credit card is a payment method which lets you pay for goods and services without using your own money. It’s essentially a short-term loan which lets you borrow the bank’s money to pay for things which you can pay back – potentially with interest – at a later date. Credit cards can also be used to withdraw money from an ATM, which is known as a cash advance. Because you’re borrowing money from a bank, credit cards charge you interest on the money you use (unless you repay the entire debt during the interest-free period). When you apply for a credit card, the bank gives you a credit limit which sets the maximum amount you can borrow using your card. Credit cards are one of the most popular methods of payments and can be a convenient way of paying for goods and services in store, online and all around the globe.

How to pay a credit card from another bank

Paying or transferring debt from one lender to the other is called a balance transfer. This involves transferring part or all of the debt from a credit card with one lender to a credit card with another. As part of the process, your new lender will pay out the old lender, so that you now owe the same amount of money but to a new institution.

Many credit card providers offer an interest-free period on balance transfers to help new applicants better handle their debt. During this period, cardholders are not required to pay interest on the debt they brought over from the other card. This can be a great opportunity for consumers to pay off credit card debt with no interest. There are often fees associated with balance transfers; normally, these are a percentage of the amount transferred.

So make sure you read the terms and conditions of the card before transferring any debt across.

How is credit card interest charged?

Your credit card will be charged interest when you don’t pay off the balance on your credit card. Your card provider or bank charges you the individual interest rate that is associated with your card, which is usually between 10 and 20 per cent. 

The interest will be added onto your bill each month or billing period if you don’t pay off the balance, unless you are in an interest-free period.

You will be charged interest on anything that hasn’t been paid for inside the interest-free period. Usually you will receive a notice on your bill or statement saying you will be charged interest so you have some form of notice before you’re charged.

How does credit card interest work?

Generally, when we talk about credit card interest, we mean the purchase interest rate, which is the interest charged on purchases you make with your credit card.

If you don’t pay your full balance each month (or even if you pay the minimum amount), you are charged interest on all the outstanding transactions and the remaining balance. However, interest is also charged on cash advances, balance transfers, special rate offers and, in some cases, even the fees charged by the company.

The interest rate can vary, depending on the credit card. Some have an interest-free period, otherwise you start paying interest from the day you make a purchase or from the day your monthly statement is issued. So avoid interest by paying the full amount promptly.

How easy is it to get a credit card?

For most Australians, there are no great barriers to applying for and getting approved for a credit card. Here are some points that a lender will consider when assessing your credit card application.

Credit score: A bad credit score is not the be all and end all of your application, but it may stop you being approved for a higher credit limit. If your credit score is less than perfect, apply for the credit limit that you need, rather than the one you want.

Annual income: Most credit cards have minimum annual income requirements. Make sure you’re applying for a card where you meet the minimum.

Age & residency: You need to be at least 18 years old to apply for a credit card in Australia, and most require that you are an Australian citizen or permanent resident. However, there are some credit cards available to temporary residents.

How to make a credit card online

If you’re wondering about how to make a credit card online application, here are some steps to follow:

  • Test the market. Many credit card options are available online. Compare providers by fees, interest and perks to ensure you’re getting the best deal.
  • Complete the application. Once you’ve selected a card, head to the provider’s website and complete the online credit card application form. Forms vary by providers.
  • Provide details. Most cards require you to meet age, residency, income and credit status condition, and you need to provide details like a bank account statement to prove this.
  • Review details. Ensure the information you’ve entered is correct.

How do you pay off credit cards?

The best way to pay off a credit card bill is to set a realistic spending budget and stick to it. Each month, you’ll get a credit card statement detailing how much you owe and how long it will take to pay off the balance by making minimum repayments. If you only make the minimum repayments, it will take you years to pay off your outstanding balance and add extra costs in interest charges. To avoid any extra charges, you should pay the entire bill. 

How do credit cards work?

Think of credit cards as a short-term loan where you use the bank’s money to buy something up front and then pay for it later. Unlike a debit card which uses your own money to pay, a credit card essentially borrows the bank’s money to fund the purchase. When you apply for a credit card, the bank assesses your income and assigns you a credit limit based on what you can afford to pay back. At the end of each billing cycle, which is usually monthly, the bank will send you a statement showing the minimum amount you have to pay back, including any interest payable on the balance.

How to pay a credit card

There are a few ways to pay a credit card bill. These include:

  • BPAY - allows you to safely make credit card payments online.
  • Direct debits - set up an automatic payment from your bank account to pay your credit card bill each month. You can choose how much you want to pay of your credit card bill when you set up the auto payments.
  • In a branch.
  • Via your credit card provider's app.