personal finances Archives - Credit Simple

3 signs your partner may be struggling with money

Credit Simple — Tue, 15 Feb 2022 05:18:38 +0000

Romantic partnerships can come in all shapes and sizes, from marriages to de facto relationships to casual relationships and everything in between.

No matter what the relationship, it’s always possible to end up in the shallow end if your significant other (SO) is drowning in debt or has poor spending habits.

Here are some common ways your partner can burden you with their debt and how you might avoid it:

1. You try to take out a joint loan with your partner, but are denied because of your SO’s past debt issues.

The only real way to escape this fate is to avoid it in the first place. That means when sizing up potential long-term partners (you know, the kind you’d trust to open up joint accounts with), you’ll need to take their financial attractiveness into account.

That means being open and transparent up front about your financial goals and how you can reach those goals together.

If you talk about the prospect of owning a home together you may have to share some personal information, like how well you save and how healthy your credit report looks.

If you don’t know what your credit report looks like, Credit Simple lets you check your credit report and score for free, anytime, and without negatively impacting your score.

Get your free report and score here.

2. Your partner asks you to take out a loan on their behalf.

This can impact anyone, whether you’re in a long-term commitment, or have only known each other for a few weeks.

If your partner doesn’t have the cash flow and/or the credit score to secure a loan, be wary of taking out a loan for them no matter how much they try to charm you or plead with you.

You’re responsible for any debts in your name, period.

If it’s to purchase a car, property or some other large asset – and you really do want to help – make sure to get a title for the asset and register it in your name.

You’ll still be responsible for the debt, but at least with a title, your SO can’t make off with the asset if the two of you happen to split.

It’s also a good idea to have your own personal savings account where you can stash away your own funds in case of such an emergency.

3. You open up a joint account with your partner, and they go on a spending spree.

There are a number of ways your partner can misuse a joint account and burden you with debt.

It could be a joint credit card where they spend a huge sum on gambling, buying shoes or whatever their fetish.

It could also be a joint savings account they drain in a similar vein, leaving you with nothing left to pay off your debts (personal and/or shared).

Another scenario is where you have a mortgage with someone, and they withdraw funds using the redraw facility (a feature on some accounts that lets you make extra payments in return for the ability to withdraw this extra cash later down the road).

If you’re worried about your partner’s spending habits, the best way to escape this fate is to avoid joint accounts altogether, or go for a joint account that requires each person’s authorisation for any withdrawals or purchases.

The bottom line

Like many aspects of a relationship, there’s a lot of shared responsibility when it comes to finances – especially as the relationship progresses.

The keys to keeping yourself safe from a reckless partner are to vet your potential partners at the outset of the relationship, let your finances intertangle only at a rate that feels appropriate to the relationship’s strength and put safeguards in place if you are happy to take on the lion’s share of financial responsibility.

The information in this blog post is general in nature and does not constitute personal financial or professional advice. It is not intended to address the circumstances of any particular individual. We do not guarantee the accuracy and completeness of the information and you should not rely on it. Before making any decisions, it is important for you to consider your personal situation, make independent enquiries and seek appropriate tax, legal and other professional advice.

The post 3 signs your partner may be struggling with money appeared first on Credit Simple.

The simple step to help you pay down debt? Speak up.

Credit Simple — Wed, 10 Feb 2021 21:54:43 +0000

If you’re feeling anxious about your debts, it’s time to start communicating. Here are five steps you can take to talk to your credit providers about debt.

1. Call your credit providers

If you’re feeling overwhelmed by debt, give your credit providers a call. It is in their best interests that you make your repayments, so there is no harm in having a chat.
Call your utility company, telco or lenders and explain your financial hardship. If the customer representative you’re speaking with is unhelpful, escalate your call to a hardship officer or manager.

2. Talk it through

Go through your options with your credit provider. They may be able to offer you more affordable repayment plans, due date extensions or hardship variations.

Many credit providers can amend their terms to ensure you can continue to pay. You might be surprised at the options they have available to you.

3. Aim to agree

By now you would have done a budget and know your incomings and outgoings. While the aim is to at least meet minimum repayments, you should have a good idea of what you can and can’t afford. Therefore, if there is no way you can meet your minimum obligations, you should negotiate alternative payment structures. And if your situation changes, let them know straight away.

4. If debt issues persist

If you’re still finding it difficult to get on top of your debts, you can reach out to the National Debt Helpline on 1800 007 007 or contact a Financial Counsellor. The National Debt Helpline can put you in contact with your local service.

5. Don’t be lured by quick fixes

There are many providers out there promising to consolidate your debt, refinance and transfer your balance. Some of these can be legit and may help you. But they can also add to your financial burden through hidden fees, higher interest and lock-in contracts.

Our advice: be aware! Don’t look at these options until you have spoken with your current providers about your situation.

For more tips on how to stay on top of your finances, sign up or log in to Credit Simple.

The post The simple step to help you pay down debt? Speak up. appeared first on Credit Simple.

The first 3 steps to paying down your debt

Credit Simple — Wed, 03 Feb 2021 22:01:54 +0000

Have you entered the new year with existing debt from 2020?

You’re not alone. More than one in three Aussies enter January with Christmas debt from one year to the next¹.

When you combine this with household debt, credit card debt and buy-now-pay-later owings, it’s fair to say many of us will need a helping hand to get on top of our bills.

Household debt has significantly increased with the latest household to net disposable income ratio sitting at 210%², meaning that on average, people have debt equal to two years’ disposable income. There are also more than 13.7 million credit cards in circulation accounting for a national debt of $21.1 billion³. The buy-now-pay-later (BNPL) industry is also booming. As of June 2019, there were more than 6.1 million accounts, representing 30% of the Aussie adult population and totalling more than $5.6 billion in the 2018-19 financial year⁴.

As we enter the new year, we have outlined three easy steps for you to start the year on the right foot and tackle your debts in 2021.

1. Lay it all out on the table

This first step is easy. Grab all your latest bills, statements, invoices, anything you owe. Go do it now, we’ll wait…

Find the most recent copies of your mortgage, rent, electricity, water, gas, phone, internet, car insurance, credit cards, BNPL statements and physically lay it out on the table.

Debt can feel overwhelming. Seeing what you owe and tallying it all up is confronting but it is also a good motivator to get on top of it.

With each debt work out how much you owe and the repayments.

This will prepare you for step 2.

2. Identify your smallest debt

So, you’ve laid out your debts and identified the monthly repayments. Next, grab a piece of paper and list the debts from smallest to largest by outstanding debt amount. Number 1 will be the smallest.

Keep this list handy! Store it in the same folder as all your other bills and expenses.

Now, grab your bill with the lowest debt and keep it in a visible place – maybe the fridge, bathroom mirror, anywhere you can see it.

Your focus over the next few months will be to use any savings you have after making your monthly debt repayments, to pay off the smallest debt.

This will involve making additional payments to this debt. Before you know it, your smallest debt will be paid off. You will then put this money into the next smallest debt (that’s number 2 on your list) and so on. Continue this process until all your debts are paid. This is known as the snowball effect.

3. Automate your repayments

One of the easiest ways to keep your repayments on track is to set and forget.

All you need to do is set up the repayments for each debt to automatically debit from your account each month. Plus, don’t forget to set a little extra repayment for the smallest debt.

It’s a good idea to set this up soon after you get paid.

Why this method works

The method is called the ‘Snowball Effect’. The idea is that the satisfaction you get from paying off the first debt motivates you to pay off the next one. This is because each debt you pay off feels like a big achievement, inspiring you to keep going. It’s also much easier to focus on one thing (debt) at a time, so you’re unlikely to get overwhelmed and give up.

Footnotes
1. https://www.finder.com.au/press-release-jan-2020-7-2-million-aussies-will-nurse-a-new-year-financial-hangover
2. https://data.oecd.org/hha/household-debt.htm
3. https://www.finder.com.au/credit-cards/credit-card-statistics
4. https://download.asic.gov.au/media/5852803/rep672-published-16-november-2020-2.pdf

The information provided in this blog post is general in nature and does not constitute personal financial advice. It has been prepared without taking into account your personal objectives, financial situation or needs. Before making any decisions, it is important for you to consider your personal situation and seek appropriate tax, legal and other professional advice.

The post The first 3 steps to paying down your debt appeared first on Credit Simple.

This could be the secret to better budgeting

Credit Simple — Wed, 07 Oct 2020 01:09:13 +0000

If you’ve never had a budget, or if you’ve tried and given up on one before, it can be easy to get overwhelmed. Visions of complicated spreadsheets and living on nothing but 2 minute noodles make the idea seem at best, snore-inducing and at worst, overly restrictive. But the truth is it takes very little effort to get a basic system in place. This is great news, as it can mean the difference between major savings and none at all.

If you’re hesitant to set up a budget, or even if you have one now that’s only kind of working for you, here’s a solution that may just work: separating your money into ‘buckets’.

What is a money ‘bucket’?
This concept has been doing the rounds of the personal finance blogs and media for a while now, and it’s a simple one: instead of a complicated line-by-line budget that accounts for every cent, you simply split your income into a separate account – and automate transfers – for each category. That way, you automate your saving and spending so it becomes easy to save: it’s that simple.

Step 1: Track how you’re spending now
For a week, or better yet, a month, track your spending. Many banks in Australia and New Zealand also have this function built in to their online banking, categorising your transactions for you. However you choose to do it, you’ll soon see trends emerging, and you’re ready to move onto the next step.

Step 2: Choose your categories and decide how much goes in each
Once you have all your info, it’s time to come up with a few broad categories that reflect a realistic picture of how you want to spend and save. For example, you could have categories like rent or mortgage and bills, emergency savings, groceries, eating out, fun money, travel savings and debt. Less is definitely more – fewer categories makes for a simple budget that’s easy to stick to, making it easier to save. Once you’ve set your categories, decide what percentage of your income needs to go into each. Assuming you’re not spending more than you’re earning, this needn’t be vastly different from how you’re spending now.

Step 3: Open an account for each category
With a different account for each type of spending and saving, you’ll know exactly how much you have in each. Many financial institutions offer an option for multiple accounts linked together, and you can even give them customised names so you can see, at a glance, how much you have in each one.

Step 4: Set up your automatic transfers
As with many things in life, set and forget is the surest path to success. Make sure you set up direct debits for each of your categories so your money is moving where you need it without you needing to think about it. Many companies will let you split your salary this way, or you could have all your income go into one account to begin with, with regular transfers set up to move money between accounts automatically.

Step 5: Regular check-ins
Whether monthly or quarterly, it’s a good idea to check regularly to make sure each account is where it needs to be. That way, if you find one overflowing while another is almost empty, you’ll know it’s time to tweak your transfers to better match your spending and saving goals.

So what are you waiting for? It’s time to let your savings take care of themselves. see how automating your finances can help you save towards your dreams.

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What is a personal loan?

Credit Simple — Wed, 12 Feb 2020 07:10:49 +0000

A personal loan is a monetary loan you can get from a credit provider such as a bank, credit union or online lender – usually for a specific life purpose like renovating your home, paying for a holiday or consolidating several smaller loans.

Lenders approve personal loans by evaluating your creditworthiness.

When you enter into a contract for a personal loan, you typically receive money in a lump sum and agree to repay the lender back the money in regular instalments over a specific length of time.

You also pay interest on the amount you borrow, and in some cases, you may pay fees and other charges. These interest rates, fees and charges can vary from lender to lender, loan to loan and borrower to borrower.

How do personal loans work?

If you’re considering a personal loan, you should become familiar with some of the details, including how much you can borrow, how to apply and how much they cost. Here are some of the main concepts to remember:

The amount you can borrow. Personal loan amounts can be very small or very large. We’ve seen lenders offer loans as little as $500 and as large as $70,000.
The application and approval process. You can apply for some personal loans online in a matter of minutes and be approved (or denied) just as quickly. With others, you may have to visit a branch and it may take days for the approval process to complete.
The cost. On top of requiring you to repay the loan amount, lenders make their money by charging you in a number of ways. These may include interest on the loan, as well as fees like an establishment fee, monthly fees, late payment fees and early discharge fees. Your specific combination of charges will be described in your contract.
The loan term. This is how long you’ll be paying off the loan. We’ve seen loan terms as short as 3 months or as long as 7 years.
The amount of repayments and when they are due. Your loan amount, interest rate and loan term will be set in advance, so it’s easy for the bank to calculate exactly what your regular payments will be and when they are due.

Types of personal loans

Here are the main types of personal loans you may encounter:

Unsecured personal loans. Your standard personal loan you can use toward various life projects like a holiday, home renovation or medical bill.
Car loans and other secured loans. A personal loan where you offer up an asset as collateral in case you can’t make your payments. This collateral is officially known as the security. Take for example a car loan, where the purchased car serves as security that the bank can repossess if you can’t make your payments
Debt consolidation loan. A special type of personal loan you would use to pay off several smaller loans.
Line of credit. A personal loan where a specific amount is available for you to borrow, but you don’t have to borrow it all. You only pay interest on the amount borrowed.
Quick cash loan. A personal loan that doesn’t have a strict acceptance criteria so that people with lower credit scores can get the loans they need. These often come with higher interest rates and fees.

How much do personal loans cost?

The cost of personal loans will differ from person to person and loan to loan. A large part of this comes down to your creditworthiness. For example, someone with a higher credit score and a more positive borrowing history will often pay less for the same loan than someone with lower marks.

Here are some factors that will determine how much you’ll pay:

Interest rate. This the percentage your debt will increase every year. Most personal loans will charge an interest rate. The Australian Securities & Investments Commission has capped interest rates at 48% but we’ve seen rates as low as 5.75%.
Fees. Many loans will also charge fees on top of the interest, such as a one-off establishment fee to set up the loan or even monthly fees. Some very small loans might do away with an interest rate altogether in favour of one set loan fee.
Comparison rate. This is simply a loan’s interest rate when fees are factored into it. Since not all loans charge the same fees, this comparison rate makes it easy for you to compare the loan cost of several loans side-by-side.
Length of loan. Since your interest rate adds to your balance each year, the longer you have your loan, the more you’ll end up paying in the long run (all else being equal).
Amount borrowed. Generally speaking, the more you borrow, the more you’ll end up paying for the loan.

How do you apply for a personal loan?

Decide how much you want to borrow. Work out how much money you need for your holiday, home renovations, debt consolidation or whatever personal project you need the funds for.
Work out how much you can afford for payments. Use a loan calculator to work out how long you’ll need to pay back the loan, based on how much you can afford to pay back per month.
Compare personal loan options. Identify a few lenders with loans that meet your criteria from the first two steps. You can find special loan offers for Credit Simple users here.
Gather your paperwork. Gather together any paperwork the lender asks for. This may include ID, bank statements and proof of address.
Apply. You can apply for most personal loans conveniently online.

Does applying for a personal loan affect your credit score?

When you apply for any loan, your credit score can dip slightly. However, with Australia’s Comprehensive Credit Reporting system, regular on-time payments can help your score go right back up.

Some lenders will advertise something along the lines of “free rate quote that won’t affect your credit score.” This means they will quote you a rate based off of basic info like your income and the amount you want to borrow – without doing a credit check.

But this is not the same as applying for the loan. If you want to apply for the loan based on the rate quoted to you, you will usually have to go through a credit check and your score may dip as a result.

Who should get a personal loan?

You should only get a personal loan if you have a specific purpose in mind for the money: to help pay for a special project, purchase or life event, or to help out in a time of emergency.

Taking out a lump sum without any real purpose for it could lead you to squander it and end up with a large debt with not much to show for it. For regular ongoing purchases you plan to pay off regularly, you could consider a credit card instead.

The information in this blog post is general in nature and does not constitute personal financial or professional advice. It is not intended to address the circumstances of any particular individual or business. We do not guarantee the accuracy and completeness of the information and you should not rely on it. Before making any decisions, it is important for you to consider your personal situation, make independent enquiries and seek appropriate tax, legal and other professional advice.

The post What is a personal loan? appeared first on Credit Simple.

Avoid financial heartache this Valentine’s Day

Credit Simple — Wed, 12 Feb 2020 01:35:54 +0000

Valentine’s day is just around the corner. And you know what that means: candle-light dinners, romantic water-side strolls, mouth-watering chocolates, exquisitely arranged bouquets and… your beloved’s outstanding debt?

At first you’ll be enamoured by that special someone’s talents and strengths but there will come a day when you have to face their flaws. And no, we’re not talking about letting one rip in the middle of a Netflix special, because we all do that.

What we’re talking about here is the possibility that your loved one has poor financial habits – habits that could get you into trouble if you’re not careful.

We have an easy-to-follow guide to help you avoid becoming an unwitting victim to your partner’s illicit financial rendezvouses, but we just wanted to take this opportunity to offer a few reminders – so that this Valentine’s Day, you’re not seduced into a lifetime of financial betrayal.

How to avoid financial betrayal

Let’s just jump right in. Here are some ways you can protect yourself from your partner’s poor financial habits:

Be wary of going guarantor.

Going guarantor on your partner’s loan means they don’t have the financial capability or credit health to get the loan themselves. Instead, they need to leverage your good financial standing. If they default, it’s on you. No ifs, ands or buts.

Pay attention to your joint credit accounts.

In most cases, you’ll be just as responsible as your partner for any debts accrued on accounts you hold together. If they run up a huge bill on luxury bags or huge nights out with the boys, the lender and/or debt collections agencies can come after you.

Check your statement regularly and if you see dodgy transactions, talk to your partner about your concerns. Seek couples counselling if necessary.

You should also check your credit score to see what, if any, your partner’s financial habits are having on your score.

Seek legal advice

In the event of a divorce or separation, the combined debts that you and your partner accrued during the relationship will get deducted from the overall joint asset pool.

This includes debt from joint credit accounts AND credit accounts in each of your individual names. So if your partner ran up gargantuan debts, you’ll end up with fewer assets when it’s all said and done – even if you weren’t aware of the debts at all.

However, there may be a remedy. If you can prove to a court that your partner accrued these debts without your knowledge and it’s clear the debts were of sole benefit to your partner, you may be able to get a court order removing these unscrupulous debts from the asset pool.

Bottom line

We don’t want to put a damper on your Valentine’s Day, since it’s meant to be a celebration of the love and respect between you and your partner. But it’s also a time when we’re too quick to don those rose-coloured glasses that hinder our ability to see the whole person we’re dining with.

So by all means, enjoy your romantic day. Feast on that gourmet Italian cuisine, fine wine and luxury chocolates. Just make sure the one who is footing the bill can actually pay it off – or it could foreshadow a lifetime of financial heartache.

The post Avoid financial heartache this Valentine’s Day appeared first on Credit Simple.

Managing your finances when life throws you a curveball

Credit Simple — Fri, 24 Jan 2020 02:39:06 +0000

Occasionally life will throw you a curveball that directly or indirectly impacts your finances: you’re made redundant, your furnace dies or you’re expecting a child and you realise you’ll need to upgrade homes in the not-too-distant future.

The last thing you want is to dig yourself into a deeper hole because you weren’t able to manage the financial side of things.

Here are some ways to avoid that, so that you can bounce back sooner rather than later.

1. Put your spending on lockdown.

The first thing to do is to stop spending more than is necessary. Some of the easiest ways to do that without disrupting your lifestyle too much include:

Cancelling any unnecessary subscriptions. With so many online providers charging a subscription fee these days, there are bound to be some you can cancel or temporarily shut off. Keep the Netflix subscription if you love movies or the Spotify subscription if you love music, but nix the rest if you can.
Cutting back on the luxuries. Temporarily swapping a movie night in for a night at the cinema or swapping organic groceries for the non-organic kind can save you some money without disrupting your lifestyle too much.

2. Review your budget (or create one for the first time).

We’re big proponents of creating a budget so if you haven’t created one yet, now’s the time to get onto it.

Even if you already have a budget in place, now’s a good time to revisit it.

If there’s anything this situation can teach you, it’s that your financial situation doesn’t stay the same forever. Pull your budget back out for a re-review and see if there is anywhere else you can cut back.

3. Check your financial institutions’ financial hardships policies.

If you’re having a hard time making ends meet even after tightening your belt, you may want to reach out to your bank, lenders, utility companies and anyone else you owe money to.

They’ll often have financial hardship policies that will temporarily halt your payments or reduce them, so that you can continue to meet your obligations and avoid late fees and defaults. After all, the last thing you want to do is make a difficult situation worse by going even deeper into unnecessary debt.

4. Cash out your rewards points.

If you have any rewards programs like frequent flyer points or credit card rewards , you may have the option to convert your points to cash or use them like cash toward your next credit card payment.

Using points for cash usually doesn’t go as far as using them toward merchandise or flights, but it may be worth it if you need to “buy” yourself another month or two.

5. Make minimum payments where it makes sense.

When life throws you a financial curveball, it often makes sense to hang onto as much cash as possible so that you can pay any additional unexpected bills that crop up. For example, if your best friend (aka, your dog) has emergency surgery, you’ll probably want some cash handy for any unexpected prescriptions during the recovery phase.

That means it might make sense to reduce loan payments to the minimum due so that you don’t find yourself back to square one when yet another bill comes knocking.

6. Get help.

If you find that your financial situation is more than you can handle alone, there are organisations that can help, like National Debt Helpline or various state-based debt advice services. You can find a comprehensive list of these services here.

Stay strong

We all experience situations that test our finances at one time or another – often multiple times throughout our lives. The key is to take strong action to keep the financial hit from spiraling out of control.

And if you do find that such situations test your mettle a little too much, it’s never too late to start thinking about a curveball account (perhaps better known as an emergency fund). This is a savings account specifically set up to help you through times like this.

That way next time, it’ll be just that little bit easier.

The post Managing your finances when life throws you a curveball appeared first on Credit Simple.

How to compare credit cards the right way

Credit Simple — Tue, 07 Jan 2020 23:30:07 +0000

Comparing credit cards the right way can be rewarding, because there’s a credit card that can cater to almost every lifestyle and financial need.

When you compare, you’ll be looking at everything from interest rates, to reward programs to promotional offers to fees.

Compare credit cards by type of card

Since you probably already know that closing your accounts too often can hurt your credit score, we hope you’ll keep your card for some time. That’s why it’s important to choose the type of card that’s right for you – so you can enjoy its lifestyle benefits for time to come.

Here are the main types of cards:

Reward credit cards. Cards that let you earn points you can redeem for gift vouchers, merchandise, travel, cash and more. These are great for people who pay off their credit card every month (so as to avoid interest).
Frequent flyer credit cards. A type of rewards card that works with your airline’s frequent flyer programs to supercharge your points accumulation. These are great for people who fly a lot and who pay off their cards every month.
Low-rate credit cards. Cards that charge a lower interest rate on purchases compared to most other cards. These are great for people who occasionally carry a balance, such as at Christmas time.
No annual fee credit cards. Cards that don’t charge a yearly fee just to carry them. These are great for people who don’t use their card a lot or who keep their card mainly for emergencies.

Compare cards by interest rate and fees

Once you know what kind of card you want, you’ll want to find out how much it will cost you. Costs usually come from:

Interest rate. The percentage your debt or balance will grow per year. Go for a lower interest rate if you think you’ll often carry a balance from one month to the next.
Fees. These may include annual fees, cash advance fees, international transaction fees, additional cardholder fees and late payment fees. The fewer fees the better, although annual fees are sometimes unavoidable for certain types of cards like rewards cards.

Compare by the promotional offer

Depending on how you want to use the card, you may want to consider any introductory offer that comes with a credit card. Here are some of the most common:

0% purchase rate. These cards charge 0% interest on purchases for a limited time, such as 6 months or a year. This might be a good option if you plan to make a lot of purchases at once, such as at Christmas time or before a holiday, and could use a few months to pay it off.
0% balance transfer. These cards charge 0% interest, up to a certain amount and for a limited time, on existing debt you transfer over from other cards. These are good for people who want to consolidate debt from multiple cards and have a plan to pay it all off by the end of the promotional period.
Extra rewards or points. Some rewards cards will offer extra rewards or points just for signing up. For example, a travel card or frequent flyer card could offer a free domestic flight or a rewards card could offer 10,000 free bonus points.
Waived annual fees. Some cards will temporarily waive the annual fee, such as for the first year.

Compare credit cards by their perks

Many cards will come with additional perks that are also worth keeping your eye out for. These can include:

Free travel and medical insurance
0% foreign transaction fees
Airport lounge access
Concierge services
Purchase protection and extended warranty
Retail partner discounts
Hotel status credits
Event tickets

Bottom line

Conducting your credit card comparison the right way is important for a number of reasons. It can keep you from paying too much for your card and it can ensure that you enjoy valued perks, rewards and lifestyle benefits on an ongoing basis.

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What are neobanks and how are they different?

Credit Simple — Tue, 17 Dec 2019 05:00:00 +0000

The term ‘neobank’ refers to a new crop of financial institutions that has been sprouting up throughout Australia and the rest of the world since at least 2017.

What makes these banks different from traditional banks is that they have been reimagined from the ground up with a purely digital focus – to run seamlessly through an app and with no branches anywhere in sight.

What are the benefits of using a neobank?

The outside-the-box thinking common to neobanks offers several advantages over traditional banks:

A better digital experience. Neobanks’ digital offerings aren’t hamstrung by complex legacy systems common to traditional banks. That lets them quickly develop and release features like peer-to-peer payments, spending analysis, AI-based money management tips and customisable user-friendly dashboards.
Lower costs. The lower cost of operating a digital bank means the bank can pass those savings onto you in the way of no-fee accounts, a free debit card and overdraft protection – by not allowing you to overdraw in the first place!
Less hassle overseas. Many digital banks offer fee-free international transactions at highly favourable exchange rates. Some digital banks will even let you store multiple currencies all within the same app.

What’s the difference between a digital bank and a neobank?

You may be wondering about digital banks like ING, ME Bank and UBank. After all, they don’t have any branches (at least until recently), they operate via an app and it seems like they’ve been around forever.

The truth is, these banks aren’t truly 100% digital; they’re usually operated by a large traditional bank. For example, ING is owned by ING Bank, ME Bank by industry super funds and Ubank by NAB. Digital banks generally have the same drawbacks that traditional banks have, namely they generally operate off a digitised version of their legacy systems.

There’s nothing wrong with digital banks like these. After all, their lack of branches translates into lower operating costs for the bank and ideally better terms for you.

But neobanks take this one step further by focusing on purely digital solutions that are built from the ground up for a digitally savvy customer.

Are neobanks safe?

A bank needs to become a licensed authorised deposit-taking institution (ADI) to take deposits in Australia. This means they have to go through the regulatory process to get approval from and be overseen by the Australian Prudential Regulation Authority (APRA).

Being an ADI means the bank has demonstrated to APRA that they meet APRA’s prudential standards and other regulatory and legal requirements.

It also means the Australian government will protect your deposits up to a cap of $250,000 with that ADI

Are there any neobanks in Australia and what services do they offer?

Here are the Australian neobanks with full ADI status offering consumer-facing products as of November 2019:

Xinja. Offers transaction accounts and is beta-testing home loans.
86 400. Offers everyday transaction accounts, savings accounts and home loans.
Up Bank (through Bendigo and Adelaide Bank). Offers everyday transaction accounts and savings accounts.
Judo Bank. Offers small-business loans and term-deposits.

Other financial institutions that either don’t yet have an ADI or have not officially launched any products include Revolut and Qpay.

The information in this article is general in nature and does not constitute personal financial or professional advice. It is not intended to address the circumstances of any particular individual. We do not guarantee the accuracy and completeness of the information and you should not rely on it. Before making any decisions, it is important for you to consider your personal situation, make independent enquiries and seek appropriate tax, legal, financial, and other professional advice.

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7 ways to save money this holiday season

Credit Simple — Wed, 11 Dec 2019 06:17:29 +0000

Here are a few tips to help you ring in the new decade with as little debt as possible.

1. Reconsider whom you need to shop for

At different points in our lives, it makes sense to shop for certain people and not for others. For example, when our nieces and nephews are young, gifts are appropriate but when they’re adults, maybe a heartfelt card is enough.

Go through your list and decide whom you really need to shop for and who can make do with a heartfelt holiday wish.

2. Set yourself a limit – and stick to it

Now that you know who you need to shop for, set yourself a budget based on what you can reasonably afford. Set aside one “money bucket” for gifts, remembering to factor in the cost of wrapping paper, tape, greeting cards and the like

Consider a separate money bucket for food, drinks and entertainment. This includes eating out, coffees, treats, parties, costumes and movie outings.

Once you have your budget, stick to it. The whole point is to spend only what you can afford to spend.

3. Consider what people actually need

It’s often the case that people don’t really need, or even want, new expensive gadgets in their lives. If you consider what each person really needs, you may uncover creative and inexpensive ways to fill their holidays with cheer.

Maybe you can surprise your nostalgic mother by transforming all your old childhood photos into a digital scrapbook, or give your achy partner a massage based on a technique you learned from YouTube.

4. Shop online

If you do end up with a few physical goods on your to-buy list, consider buying them online. Not only can you often find better deals, but you’re also less likely to incur unexpected or hidden expenses like petrol, parking, eating out, that special gift to yourself and all those pumpkin gingerbread lattes.

But online shops want your dough just as much as brick and mortar shops do, so make sure you don’t get sucked into all the online sales and marketing gimmicks.Make sure you shop around for the best deals and buy only what’s on your list.

5. Do a Secret Santa

Secret Santas aren’t just for the office and the school yard; they’re great for families too. So if you really want to save money this holiday season, and help others do the same, consider a great big Secret Santa.

Ask everyone to write down their name on a slip of paper, along with two or three items they need (or they can simply write “surprise me!”) and throw those into a hat. This way, everyone can save a little money and no one is left with a useless gift they’ll just toss later.

6. Go potluck

There’s nothing wrong with wanting to entertain guests at your home over Christmas or New Year’s Eve. However, there’s no reason to splurge on all the food yourself. If you decide to throw a party, go ahead and cook a couple of your specialty dishes, but ask all your guests to bring something too.

7. Spend New Years in

You don’t need us to tell you how expensive it can be to pay for food, drinks and cover charges just to attend a fancy New Year’s party. Why not hang some mistletoe at home and have your party there?

You won’t have to put up with obnoxious strangers and you won’t have to stand on milk crates to see the fireworks on your big screen and most importantly food and drinks will be a fraction of the price.

Eat, save and be merry!

With some foresight and a little self-control, you can get through these holidays without burying yourself into a pile of debt you’d otherwise spend the next year digging yourself out of.

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