Less than 3 months to save for Christmas

Less than 3 months to save for Christmas

If you can bear to think about it, Christmas is less than three months away. And while millions are expected to pay for Christmas largely on credit again this year, savings are available if you plan ahead.

In the lead up to Christmas 2012, Australians racked up more than $22.5 billion on their credit cards and withdrew $757 million in cash advances, according to a RateCity analysis of Reserve Bank of Australia credit card data.

“The earlier you start, the more money and stress you’ll save,” RateCity CEO Alex Parsons said.

“We know that last year, Australians planned to spend around $511 each, or $8.5 billion as a nation, on Christmas gifts.

“However, a third felt pressure to spend more than they could afford, with around half planning to use a credit card to cover the gap.

“This year could be another cash-strapped one for many, but with a bit of forward thinking you can have the Christmas you want for less.”

Top 10 tips to make your Christmas budget stretch further

Plan how you’ll pay (or pay back): Of course, one of the best ways to fund Christmas is through your savings. That way you won’t pay interest on your purchases – making the festivities all the sweeter! But it could take longer than three months to reach your savings goal in time for Christmas, in which case there are a few alternatives to consider, including credit cards (particularly if you repay the balance during the interest free period), personal loans and even your home loan.

Start now: The earlier you start, the more you’ll save. Starting your Christmas shopping early is a must if you want to get more for your money. Not only will you have more time to set a budget and decide what to buy, but you’ll also have time to shop around for the best prices so that come January, you’re not left with an empty wallet.

Boost your savings: Look out for bonus rates awarded for certain behaviours, such as making a number of deposits every month. Keep an eye out for introductory rates too – many high interest accounts offer a bonus rate of interest for the first 4 months from opening and rates upwards of 4.5 percent are available if you shop around.

Lock it away: if you’ve been diligent in saving money this year, or you’ve been lucky enough to get a windfall, such as a cash bonus from work, and you want to avoid the temptation to spend it, then consider locking your money away in a term deposit account. Most banks will negotiate on rates – you just have to ask! Or compare term deposit rates online.

Put your home loan to work: Adding extra savings to your home loan or into an offset account linked to your home loan can also be a tax effective option for savers. The rate that applies to your home loan is likely to be higher than the return on most savings accounts so your mortgage can be a good place to park your savings.

Reduce travel costs: Christmas is typically the most expensive time to travel in Australia so getting in early to buy flights, or scheduling flights outside of the extreme peak period, can help to trim costs. For those taking to the road this Christmas to visit family and friends, consider using a petrol price comparison tool such as MotorMouth’s cost calculator to search for the best pump prices.

Shop around: One of the easiest ways to keep Christmas costs under control is to avoid paying more than necessary for gifts and other festive must-haves, such as food and alcohol, so shopping around is a must. It’s possible to compare prices online for most goods and services – and even finances, which will also save you time spent at the shops or bank. Pre-Christmas sales can be a good opportunity to pick up a few gifts at a reduced cost too – but it’s wise to make a list of what you need and stick to it, to avoid impulse buys!

Check for cash-back offers: We’ve seen lots of interest – and heaps of choice – in credit cards that offer simple rewards, such as cash back or shopping voucher rewards. Banks are also getting in on the action by offering financial incentives to entice new customers to open transaction accounts. ING Direct, for example, pays an instant 5 percent back on payWave purchases under $100. The beauty of this is it doesn’t cost anything for consumers to switch accounts!

Use money-saving apps: there’s no shortage of mobile solutions to help you save money this Christmas and some of the best free ones include; ATM Hunter, which lets you find the closest ATMs from your provider; TrackMySpend, a government app that allows you to track your expenses, set limits and budgets; RedLaser, which allows shoppers to scan barcodes of groceries and other items to check they’re buying from the cheapest outlets; Coles and Woolworths’ apps, which helps you do a  budget-friendly Christmas shop; and Getprice, which helps consumers identify stock locally to eliminate waiting and delivery costs.

Make the most of credit card rewards: If you’re going to spend hundreds of dollars on Christmas presents you might as well get something back! More ‘no frills’ credit cards now offer rewards that were once limited to the premium credit cards. Some of these benefits include travel insurance, price guarantee schemes – refunding the difference if a lower price is found for a purchase, extended warranties and VIP packages on event tickets. But be sure the fee charged for program doesn’t outweigh the value of the reward – these programs aren’t suitable for every shopper!

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Learn more about credit cards

How to increase my Commonwealth credit card limit?

Commonwealth Bank credit cards are extremely popular in Australia for everyday purchases and big ticket items alikers. A number of the card’s functions can be customised, depending on your needs and desires. If you wish to increase your Commonwealth credit card limit using the CommBank, you can usually do so on the app or via NetBank.

In the CommBank app, tap on the ‘Cards’ icon and choose your credit card. Then, click on ‘Credit Limit’ and select the ‘Increasing your limit’ option. If you don’t have the CommBank app, you can also increase your Commonwealth Bank credit card limit through NetBank. Simply log on and go to Settings, then click on ‘Product Requests’ and then choose ‘Credit Card Limit Changes’. 

Once the bank has received your application, they will review your account and payment history. Based on this assessment, your application will either be approved or denied. If approved, your new limit will be applied to your card instantly. 

While increasing your credit card limit may be an easy process, it’s important to remember that you should only request limits that you can manage. A high limit increases the risk of having a larger debt, even with cards that provide low-interest rate options. So, it’s important to think carefully and seek advice from people you trust before increasing your Commonwealth Bank credit card limit.

How to increase your Qantas Premier credit card limit

When your income or spending habits change, you might wish to increase your credit card limit. The Qantas Premier credit card allows you to do this over the phone. You can contact Qantas Premier Card Support by calling on 1300 992 700. Unlike some other credit providers, Qantas doesn’t give you the option to increase your limit online.

Qantas will only accept your application if you have a good history of repayment and have not increased your credit or bought another credit product from Qantas in the past six months.

Before approving your Qantas Premier credit card limit increase, Qantas will perform a credit assessment on your current financial circumstances and ask why you would like to increase your credit limit.

To ensure that there are no bumps in your application process, you must provide accurate and recent information about your financial situation. You should also account for any future changes you’re anticipating which could hinder your ability to repay the loan.

Once the assessment is complete, Qantas will either approve or deny your application. If they approve it, you will need to sign a credit limit increase agreement - and you can request a written copy of the credit assessment. However, if your application is rejected, Qantas can opt not to provide a copy of the assessment.

How can I increase my credit card limit on my American Express card?

If you want to increase the credit limit on your American Express (AMEX) credit card, you will need to apply through the AMEX Online Services, or by calling the number on the back of your card. You may need to share personal information that the bank can use to assess whether the requested limit is suitable for you and your current financial status. Once your application is approved, your new limit will be ready for use within an hour.

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 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 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 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 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 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.

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. 

What's the best credit card for rewards?

There is no one-size-fits-all best rewards credit card. It's best you research what type of rewards program you'd like, as well as the fees, interest rate and conditions associated with those types of cards before making a choice. 

Rewards credit cards can also come with high annual fees that may end up nullifying the rewards, so think how often you use the card to decide whether the benefits outweigh the extra cost for you. A card with a lower annual fee might require a lot of spending to get any useful rewards, while another card with a higher annual fee might need fewer purchases to get a reward. 

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.

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.

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