Jawad Usman, Author at Credit Simple

6 tips to stretch your money this holiday season

Jawad Usman — Tue, 06 Dec 2022 00:57:30 +0000

Christmas can bring a lot of joy, as well as a lot of budgeting challenges. And with recent rising inflation and interest rates, this holiday season could be one of the trickiest to budget yet.

Many of us may need to cut back on our Christmas spending this year to avoid ending up with debts that could take until Christmas next year to pay off.

However, you can reduce your Christmas budget costs and still have a holiday full of festive cheer.

Cheer that includes knowing that this season’s “ho ho ho” won’t become an “oh no no no” when your bills arrive in the new year.

Here are six tips to help you budget for a Christmas that won’t break the bank.

Plan your Christmas shopping now – including for next year

We know it’s easier said than done, but it pays to do as much Christmas shopping as you can well ahead of time.

Items like cards and decorations – which you can save for next Christmas – often become much cheaper straight after Christmas. You can also plan some of your Christmas present shopping at the start of the year, and take advantage of the best bargains as and when you see them.

Look for second-hand or unwanted gifts

Gumtree, Facebook, charity shops – there are a lot of places you can find quality second-hand goods that make great gifts, often for a fraction of the price that they would be new.

There’s a lot of stuff you can even find for free, such as Christmas decorations and other items. Sustainable and budget friendly – win-win!

Make a budget and stick to it

It’s very easy to go overboard with your Christmas shopping. Don’t! Set yourself a budget and stick to it. And remember, if you go under your budget, anything you save will be a cherry on top.

Buy what you need, not what you want

There is often a tendency to buy things we don’t need during the festive season, sometimes just because it’s on sale. Always ask yourself “Do I want this or need this?”. Try to stick to only what you need and do away with the wants if you want to manage your finances better.

Leave big purchases until after Christmas

Remember, Christmas is only just one day. If you’re planning to shop for big-ticket items, wait until Boxing Day or the January sales, as you’re more likely to get a better deal.

Also, try to limit yourself to one big-ticket item each year if you can – and only get that if you can afford it. It’s very easy to put items on your credit card and worry about it ‘later’, but remember you’ll still need to pay that bill.

Keep your credit simple

Spending only what you can afford will help your wellbeing. However, if you do need credit you can responsibly manage, compare the different products that are available and make sure you find something that best suits your situation and needs.

From everyone here at the Credit Simple team, we wish you a very happy and joyful holiday season and a prosperous new year.

Want to access your credit report for FREE? Click here.

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Financial hardship arrangements and your credit report — 5 things you should know

Jawad Usman — Wed, 26 Oct 2022 03:10:38 +0000

Your credit report provides lenders a detailed view of your credit history. It includes the type of credit you applied for, the name of the lenders you’ve applied to and other information such as your repayment history.

Credit reporting has recently changed

From 1^st July 2022, your credit report will now show any financial hardship arrangement you enter into with a lender.

The information shown will include the repayments you make under the arrangement, but not the reason for the arrangement or any other details.

Previously, financial hardship arrangements weren’t shown on your credit report.

How this change affects you

This recent change in the Credit Reporting Code ensures any financial hardship arrangements you enter into are shown on your credit report, under your repayment history.

Before the change, if you had a financial hardship arrangement with a lender, missed payments may have been reported on your credit report, without any mention of the arrangement.

5 things to remember

Only financial hardship arrangements you have entered into after 1^st July 2022 will be reported.
If you enter into any financial hardship arrangement after 1^st July 2022, the law ensures that this information is not used to calculate your credit score.
The law limits what a creditor can do with this information. They can’t make use of this information only to close down a line of credit.
The law limits what a creditor can do with this information. They can’t make use of this information only to close down a line of credit.
The financial hardship information has to be deleted after 12 months from your credit report, which is a shorter than a 24-month period for regular repayment history. This will ensure that your circumstances don’t have a long-lasting impact on your credit report.

Want to access your credit report for FREE? Click here.

The post Financial hardship arrangements and your credit report — 5 things you should know appeared first on Credit Simple.

Buy now, but can you pay later?

Jawad Usman — Thu, 08 Sep 2022 02:31:46 +0000

Buy now, pay later (BNPL) services offer you the flexibility to purchase what you want when you want it. BNPL providers, as the name suggests, let you pay in easy instalments.

We can think of BNPL as today’s layby, as it essentially offers you the same ease as layby.

Some BNPL providers include:

Afterpay
Brighte
Bundll
Fupay
Humm
Klarna
LatitudePay
Openpay
PayPal
Payright
Zip Money
Zip Pay

Many major banks have also introduced BNPL products, which make the product you always wanted a bit more affordable.

While BNPL services have their advantages, they can also put you in a spot of bother if they are not managed carefully. It can be hard to juggle repayments and other financial commitments side by side.

Be cautious when using BNPL products

In 2021, ASIC reported that BNPL users were more likely than non-BNPL users to have experienced financial stress in the previous 12 months (21% versus 12%).¹

ASIC further found that a considerable proportion of BNPL users were taking desperate measures to meet their repayments on time. One in five BNPL users had cut back on, or went without essentials such as meals, while one in six took out an additional loan to make their BNPL payments.¹

Research by Financial Counselling Australia indicates that BNPL products are not a free or low-cost option compared to traditional credit cards. Their research indicates that the late payment fee and monthly account keeping fee can can add up to an amount that effectively equates to an extremely high quasi-interest charge. Financial counsellors are seeing increasing numbers of clients using BNPL for small amounts and then paying these fees for multiple transactions.²

Always use BNPL services with caution and remember to:

Keep an eye on the fees. Some BNPL services charge a subscription or monthly fee which could add up. These fees make the items costlier in the long run. There are other BNPL services which are interest and fee free, but if you don’t pay on time you could be charged a late fee.
Stick to a budget. While BNPL can offer you the freedom to buy what you want, you should always stick to a budget. People tend to use BNPL to get their hands on things which would otherwise be out of their reach.

It’s important to always stick to a monthly budget. Set money aside for essentials, utility bills, loan payments and other expenses before using BNPL.

Think about your credit rating. BNPL services may not access or check your credit history when you decide to sign up with them, but they may still report late or missed payments to credit reporting bodies like illion. So, a missed or late payment can be detrimental to both your credit report and your credit score.
Link BNPL to a bank account or debit card. Avoid falling into a debt trap by linking your BNPL payments to an actual bank account or a debit card, instead of a credit card. BNPL services may not charge you any fees, but your credit provider might still charge you interest for those payments. Always make sure you have money in your account to cover any BNPL payments.

More Australians are using BNPL to pay for goods and services

It’s safe to say that BNPL is a growing market and offers customers flexibility when it comes to paying for goods and services.

According to a survey conducted in 2021, around 26% of regular online shoppers in Australia used BNPL services to buy clothing and other accessories. Among the respondents, around 20% used BNPL services to pay for electronics and computing devices in that same year.³

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