The COVID-19 epidemic has taken the world by storm and left many unemployed Australians with little to no income, prompting them to cut spending while looking for alternative means of payment, like their credit cards.
Under normal circumstances, your credit card is a financial tool that can be used to your advantage, whether it’s earning rewards, helping build your credit score, or enjoying interest-free spending.
But times have changed in recent weeks and for Australians who don’t have a emergency fund, their credit card may be their only option.
To keep your debt under control and your credit score intact, here are four tips to help you manage your spending during this extraordinary time.
Switch to a lower rate table
If you have a credit card with a high purchase rate, contact your supplier and ask them to switch you to a lower rate table. This will keep your credit card bill from skyrocketing by reducing the amount of interest you will pay. Credit card purchase rates range from as low as 7.99% to 21.99%, so you’re bound to find an option that fits your budget.
Don’t skip refunds
Priorities have shifted in recent weeks for many households, who are looking to do whatever it takes to make ends meet. However, you should always remember the importance of paying your credit card on time. If you skip a payment without any explanation, you might end up with a mark on your credit score, and end up with a late payment fees, which will only add to your financial problems.
Contact your supplier and be frank about your current situation. That way, they may be able to put you on a hardship policy and provide assistance with their relief packages. For example, CommBank will reimburse any fees or interest incurred in March, while NAB will lower the minimum repayment amount threshold for customers.
Do not use your card for cash withdrawals
If you must use your credit card for your daily needs, make sure avoid withdrawing money with your card. Not only do you instantly pay interest on cash withdrawals, but cash advances on most cards tend to have higher interest rates than buy rates, so you’ll pay a premium too. additional.
In this case, it is important to reduce your expenses to a minimum and only use your plastic when absolutely necessary to make sure you don’t go overboard. If you can, continue to use your debit card to withdraw money (if you need it).
Use available rewards if possible
It’s no secret among rewards enthusiasts that the trick to scoring big with a credit card rewards is to play the long game. But as it looks like no one will be traveling or reaching Westfields anytime soon, maybe now is the time to be more down to earth with your rewards card.
If you are strapped for cash, it may be worth looking to redeem your reward points for cash back or gift cards that you can use at supermarkets. This can help reduce the pressure of having to shop for groceries or small bills with your credit card.
One last remark …
Please note that if you start using your credit card daily, you will need to establish a repayment plan so that you can aggressively pay off the debt when your budget allows.
And again, unless the situation warrants it, try to use your credit card only if you it is essential.