How to spend smartly online

In years gone by, you’d head to the supermarket or fashion retailer in person and fumble in your wallet for cash or your credit card at the checkout. Nowadays, you can get almost anything – from groceries and clothing to power tools – delivered to your door.

Recent figures show online shopping is growing at a speedy pace, with online retail spending now valued at around $15.6 billion for the year to July, according to NAB‘s Online Retail Sales Index: In depth report — July 2014.

Thanks to the pace of technological change, browsing online retailer’s sites on your mobile phone from the comfort of your couch or bed is perfectly possible. But are you spending smartly online?

Is this a spending revolution?

NAB‘s report documented an 8.6 percent annual growth in online retail spending, with 35 to 44-year-olds dominating the online spending space.

Furthermore, a recent report from Nielsen questioned what’s happening in the fast-moving consumer goods (FMCG) sector, in relation to e-commerce. The Global Survey of E-commerce, which surveyed over 30,000 consumers in 60 countries worldwide, revealed “online purchase intention rates have doubled in three years for 12 of 22 measured categories”, Nielsen explained.

According to the report, Australia has 89 percent internet penetration — the highest of all Asia-Pacific countries surveyed, ahead of New Zealand (88 percent) and South Korea (83 percent). With more and more Australians turning to the cyber world, it’s no wonder e-commerce is picking up speed.

“Savvy savers are always on the hunt to find the lowest prices. These global shoppers believe they get the best prices online (60 percent), and they find deals that are better than those offered in the store (54 percent),” Nielsen stated.

Checking out at customs

If you’re purchasing items from overseas retailers, you need to carefully consider how much your purchase is really setting you back.

You’re obliged to pay duties, charges and taxes on goods worth over $1000, the Australian Customs and Border Protection Service explained. If you engage in an e-commerce spending spree beyond this figure, you’ll need to complete an Import Declaration form. The specific duties, charges and taxes depend on how much the items are worth. 

You might think you’re safer purchasing items online directly from Australian retailers — but beware! If these items are shipped directly from overseas to your home address, you may incur the aforementioned charges. If you’re unsure where your goods are coming from — and accordingly, which taxes apply — contact the retailer directly.

Band together to beat shipping costs

Of course, you can still make the most of online shopping — and protect your savings account in turn.

Provided you purchase items below the $1000 limit, it pays to bulk order clothing and other items with friends and relatives. Often, online retailers will have set shipping costs for purchases up to a certain amount. Alternatively, they may offer free shipping if you spend a minimum amount.

In such cases, it’s a good idea to buy a number of items in a single purchase and spread the shipping cost amongst the buyers.

Secure sign-up deals

Many e-commerce retailers offer a discount on your first purchase when you sign up to their e-newsletter or join an online loyalty club.

Plus, there are numerous online comparison sites that can help you get a great deal. Such sites are well worth using when you’ve got your sights set on purchasing a particular item, such as a mobile phone or laptop.

Shop around for these kind of deals in order to maximise your savings!

Protect your privacy

While online shopping is the ultimate convenience, it’s important to still remain vigilant to protect your privacy and avoid nasty online scams. There are a few key points to be aware of when shopping online;

  • Check the websites credentials
  • Don’t post personal information onto social media
  • Be careful how much of your private information you share
  • Lock your smartphones, desktops and laptops
  • Always use official banking apps – if you are unsure, go to the site directly and follow the links to download their app there
  • Make sure you have all the latest anti-virus software installed on all your applicable devices
  • Always use a secured wireless network

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Learn more about credit cards

How do I apply for a credit card online?

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 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.

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 get money from a credit card

You can get money from a credit card, but generally it will cost you.

Withdrawing money from a credit card is called a cash advance, as it operates more as a loan than a simple cash withdrawal. Because it is a loan, you may be charged interest on your cash advance as soon as you make the withdrawal. Interest rates are also usually much higher for cash advances than standard credit card purchases.

In addition to the interest rate, you may also be charged a cash advance fee. This could be a flat rate, or a percentage of your total cash advance. If you are considering a cash advance, make sure to add up how much it will cost you before committing.

What should you do when you lose your credit card?

Losing your credit card is a serious situation, and could land you in financial trouble. Here is a simple guide detailing what to do when you lose your credit card.

Lock you card – Contact your provider and inform them about your lost credit card. From here lock, block or cancel your card.

Keep track of transactions – Look out for unauthorised credit card transactions. Most banks protect against fraudulent transactions.

Address recurring charges – If your card is linked to recurring charges (gym membership, rent, utilities), contact those businesses.

Check credit rate – To ensure you’re not the victim of identity theft, check your credit rating a month or two after you lose your credit card.

How long does it take to get a credit card?

There are a few stages you need to go through to get a credit card; each one takes a different length of time.

Applying for the card online, over the phone or in person is the fastest step. This usually takes around 15 minutes, provided you have all of your documents handy.

After submitting your application, it usually takes between one to 10 business days for the lender to assess your eligibility. Some lenders offer instant approval, although you will need to send supporting documents before it is official.

Once your application has been approved, expect to wait between one to 14 days to receive your card in the mail. Keep in mind that delays can happen during busy periods, such as if the lender has launched a special deal.

Current Interest Rate

This is the current interest rate on your existing credit card.

Where can I get a credit card?

Looking to get your first credit card? You might be confused as to exactly where to go to apply for one. Here’s where to go when you are ready to put in that application.

The bank: Your bank is a great place to start, provided that you have a good banking history. Since you already have a financial history, you have more chance of your application being approved.

Credit card provider: Another option is to apply for a credit card directly from the issuer, such as Visa, Mastercard or Amex. This will most likely be an online application, so do your research and apply for a suitable card for your circumstances.

Major retailers: Coles, Woolworths, Myer and David Jones all have credit cards available. But watch out for the interest rate and annual fees – these cards are designed to help you spend more in store.

Can a pensioner get a credit card?

It is possible to get a credit card as a pensioner. There are some factors to keep in mind, including:

  • Annual income. Look for credit cards with minimum annual income requirements you can meet. 
  • Annual fees. If high fees are a concern for you, opt for a card with a low or $0 annual fee. 
  • Interest rate. Make sure you won’t have any nasty surprises on your credit card bill. Compare cards with a low interest rates to minimise risk.

Should I get a credit card?

Once you've compared credit card interest rates and deals and found the right card for you, the actual process of getting a credit card is quite straightforward. You can apply for a credit card online, over the phone or in person at a bank branch. 

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.

What is CVV on a credit card?

CVV stands for ‘card verification value’, and is also sometimes referred to as a CVC or card verification code.

A CVV code is usually needed when the card is used online or over the phone as an anti-fraud measure. Without the cardholder being physically present to sign or verify the purchase, the CVV provides an extra layer of protection. 

If you’re using Mastercard or Visa, the CVV is the three digits located on the back of the card. If you’re using an American Express, the CVV is usually four digits and is on the front of the card.

Do you need a credit card to get a loan?

You do not need a credit card to get a loan, but you usually need to have a credit history. Without a credit history, a financial institution cannot assess your ‘credit worthiness’, or your capacity to pay off the loan.

If you don’t have a credit card, your credit history can reflect any record of paying off an asset. Without any credit credit history, you’re limited in the type of loans you can apply for. But you may be able to obtain a secured loan against an asset. For more information on improving your credit score, go here