Financial counselling: Where to get help when you need it

Financial counselling: Where to get help when you need it

Whether it’s keeping up with repayments on a home loan, juggling multiple credit cards or something else entirely, many Australians fall into the trap of debt.

For example, the 11th edition of the Genworth Streets Ahead report showed that first home buyers are more and more likely to be burdened with debt simply to make up a deposit on a home.

This included 19 per cent of respondents taking out a credit card for this express purpose, and 18 per cent of those surveyed picking up a personal loan to fund their home purchase. It can be risky, and result in unsustainable levels of debt that you can’t keep up with.

However, when you do run into trouble with money, there are a wide range of services available to help you out. So where can you seek aid if managing money becomes a problem? 

Commonwealth Financial Counselling (CFC)

This is a service from the Australian government, which is then delivered to people and communities through local government departments. It aims to “help people in personal financial difficulty to address their financial problems and make informed choices”. Specific circumstances that can lead to this situation and people seeking out CFC are listed as follows:

  • Loss of employment
  • Falling ill
  • Breakdown in family situation
  • Taking on too much credit

From there, CFC can handle your case and manage creditors, open up smoother payment options for you, guide you through debt recovery and plan a budget. It’s a sound way to get back on your feet, and teaches many lessons that can help you build up a savings account once again.

Remember though, generally this service is not there for lending money, legal or business advice, or specific financial planning advice. These are recovery services for when your debts become a bit too much to handle.

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Local hotlines

As the Australian Securities and Investments Commission points out, there is a free financial counselling hotline available during the week. This links you up with a relevant service in your state or locality, and can be a great first step on the path to debt recovery when you’re working with a home loan. 

Legal centres like the Consumer Action Law Centre in Victoria, Financial Rights Legal Centre in New South Wales and other state or territory equivalents may also be on hand to answer your call if you need. These are particularly useful for credit and debt advice, especially around your payment obligations. 

Check the service

One important thing to keep in mind when seeking help with your finances is to do your research. Is the organisation going to work positively with you, or are they offering debt consolidation products? While this style of home loan reconfiguration can be useful in some cases, for many people it opens up a steeper slide into debt. Verify the credentials of the counselling or financial aid service before committing to anything further. 

Of course, prevention is often the best cure. It’s why a home loan calculator or credit card comparison can be vital before you commit to a line of credit. It allows you to move ahead with a clear view of how much something will cost you in the long run, and whether it is a manageable debt to handle. 

This is particularly important with interest rates at near-record lows. They can’t stay this low in the long term, and eventually people will have to contribute more in their regular home loan repayments.

Working with a clear plan and knowing exactly who you can call in times of need is a crucial part of taking on debt. Just as you should have a plan for when things go right, you need one for when things go wrong. 

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Learn more about savings accounts

Who has the highest interest rates for savings accounts?

As banks frequently change their rates, the most accurate way to know who currently has the highest interest rate is to use a savings account comparison tool.

What is a good interest rate for a savings account?

A good rule of thumb to keep in mind with savings accounts is to look for a rate that is higher than the CPI inflation rate. This number is constantly changing, so check the Reserve Bank of Australia’s page. If you aren’t earning interest above this then the value of your money will go backwards over time.

What is the interest rate on savings accounts?

As banks frequently change their rates, the most accurate way to look at interest rates on savings accounts is to use a savings accounts comparison tool. When you look at the savings rate check what the maximum and minimum rates are. Often banks will offer you a promotional rate for the first few months which is competitive, but then revert back to a base rate which can sometimes be less than inflation. Ongoing bonus rates are often a safer bet as they will keep rewarding you with the maximum rate, provided you meet their criteria

Can I overdraft my savings account?

A lot of savings accounts won’t let you overdraw. Some will allow this feature but you’ll need to apply first. It’s best to read the fine print and check with your lender whether this is a feature they offer. It can be a helpful addition, but as your lender can charge you a fee as well as interest for going into negative numbers, it’s best to avoid overdrafting when possible.

Can you set up a savings account online?

Yes. Several large and small banks offer online applications for savings accounts, and there are also online-only financial institutions to consider.

Online-only savings accounts are often less expensive than other savings accounts, though they may not offer the same flexibility, features, or face-to-face service as more traditional savings accounts.

How to open a savings account for my child?

Some banks and financial institutions allow parents to open a bank account for their child as soon as it is born, and start depositing funds to go towards the child’s future.

Children’s savings accounts generally don’t have fees, and are structured to help develop positive financial habits by limiting withdrawals, encouraging regular deposits, and earning interest on the savings, similarly to standard savings accounts.

How much money should I have in my savings account?

A good rule of thumb when working out a minimum balance for your savings account is to make sure that you’ll earn more in annual interest on your savings than what you’ll be charged in annual fees.

If you’re saving with a specific goal in mind, prepare a budget so the interest you earn on your deposits will help you efficiently reach this goal. Online financial calculators may be helpful here.

Can you have a joint savings account?

Yes. Joint savings accounts can be useful for two or more people wanting to combine their savings to meet shared financial goals, including spouses, flatmates and business partners.

Some joint savings accounts require all parties to sign before they can access the money. While less convenient, this extra security can help encourage all parties to meet their shared financial goals.

Other joint savings accounts allow any of the account holders to access the money. These accounts can be convenient for financially responsible couples that trust one another implicitly. 

Can you set up direct debits from a savings account?

It’s not usually possible to set up a direct debit from your savings account to cover ongoing expenses or bills, as savings accounts are structured around growing your wealth by earning interest on regular deposits, and discouraging withdrawals.

Some transaction accounts allow you to set up direct debits and also earn interest, though you may not enjoy as much flexibility as a dedicated transaction account, or get as high an interest rate as a dedicated savings account.

How does interest work on savings accounts?

The type of interest savings accounts accrues is called compound interest. Compound interest is interest paid on the initial deposit amount, as well as the accumulated interest on money you have. This is different from simple interest where interest is paid at the end of a specified term. Compound interest allows you to earn interest on interest at a higher frequency. 

Example: John deposits $10,000 into a savings account with an interest rate of 5 per cent that he leaves untouched for 10 years. At the end of the first year he will have $10,512 in savings. After ten years, he will have saved $16,470.

Can you direct deposit to a savings account?

Yes. You can make one off payments or set up regular direct deposits into a savings account. This can be organised easily through online banking or by making deposits in a branch. Talk to your lender to find out the easiest way for you to set up direct deposits.

How can I get a $4000 loan approved?

While personal loans and medium amount loans don’t offer guaranteed approval, there are steps you can take to help increase the likelihood of your application being approved, including:

  • Fulfilling the eligibility criteria (providing ID, proof of residency, proof of income etc.)
  • Checking your credit history (you can order one free copy of your credit file per year, and make sure that there aren’t any errors that may be bringing down your credit score)
  • Comparing carefully before applying (making multiple loan applications can mean having your credit checked multiple times, which can look bad to some lenders and reduce your chances of being approved by them)

What is a savings account?

A savings account is a type of bank account in which you earn interest on the money you deposit. This makes it one of the easiest and safest investment tools.

How do I open a savings account?

Opening a savings account is a relatively simple process. If you’ve found an account with a suitable interest rate, you’ll just need to get in contact with your chosen lender via a branch, phone call or hop online to begin the process. 

You may be required to provide:

  • Personal details, including identification (driver’s license, passport etc.)
  • Tax file number
  • Employment details