From pay-day loans to multiple super accounts, honeymoon period credit cards and late fees, these are some of the most common ways to flush your hard-earned cash down the drain.
Now, no one wants to do that! Here, my friend, are the financial pitfalls to avoid at all costs (pun totally intended).
1. Getting squirrel gripped by fast loan lenders
Like a dangling carrot to those who need cash fast (…). Fast loans are just that - lenders who provide quick turnaround cash loans that are meant to be for a ‘short term’ period, of, say, a month. And, at up to 400% in charges, they’re one of the most expensive loans you can get.
So how do these loan sharks get away with squirrel gripping your nuts?
They lure people in because they are fast and convenient but they often don’t do affordability checks and make the repayments unaffordable – so the borrower gets their nuts caught in a trap. It’s hard enough to pay back a loan, let alone with such outrageous fees on top of what you’ve borrowed. And, the more you borrow, the worse off you’ll be.
Discover ways to avoid getting squirrel-gripped at www.watchyournuts.com.au. If they’ve already sunk their teeth in, call the National Debt Helpline on 1800 007 007 to find ways to ease the pressure – pronto.
2. Being suckered in to ‘own now pay later’
“Enjoy now… and pay later!” It’s hard to resist the phenomenon of having whatever you want now, even if you can’t afford it, and paying sometime in the future. But many consumer advocates and personal finance experts say is a rapidly growing problem. And yes, payday loans are disastrous for your hip pocket, but don’t get suckered into other easy credit and consumables that are just as bad for debt.
3. Having multiple superannuation accounts
Sadly, our Superhero powers don’t increase with the number of super accounts we hold – they decrease. In fact, having multi superannuation accounts is actually a pain in the hip pocket. The Productivity Commission estimates around a third of superannuation accounts unintended multiple accounts, unwanted or unneeded. And that, my friend, is costing us around $2.6 billion annually in fees. Visit the ATO or MyGov (you’ll need to create an account) to keep track of your super, consolidate funds and find lost super accounts.
4. 0% ‘honeymoon period’ credit card balance transfers
Before you say ‘I do’ and commit your entire credit card balance to an alluring new card offering 0% interest, make sure you read the fine print. According to the Australian Securities and Investment Commission, 1 in 3 Australians actually increase their debts with balance a transfer. How do they ? You transfer your entire credit card balance from one card (usually a different financial institution) to the new card and get either 0% or low percent interest rate charges within the promotional period (aka honeymoon period). But you have to pay off the balance within that period. If you don’t? You’ll get slugged with often higher interest rate charges than other credit cards. There may also be other hidden fees and charges that outweigh the benefits too, such as daily and or higher interest charges on new purchases made on the card, transfer charges, annual fees and more. And, one of the main issues is that people don’t cancel their original card. So they end up with two cards, two sets of fees and more available credit to rack up…. more debt.
5. Get rich quick schemes!
The Bitcoin boom and cryptocurrency, Karl Stefanovic’s alleged investment, negative negative-gearing… if it sounds too good to be true, it probably is. There are more money scams kicking about than Nike Kobes at the NBL, so use your smarts and practice due diligence. Check out these Investment warnings and scams before you sign up to anything.
6. Late fees
Keeping on top of gas, electricity, credit cards, personal loans, phone bills … who has time for that?! Actually, you’ll need to make time. If you miss your monthly credit card payment, or are late with your phone bill or other bills, these companies will charge you – unless you contest it (and sometimes you’ll still get charged). The easiest way to get around these traps is to set up direct debits (and make sure you have the money in the account to cover bills); set up payment plans; shop around for better phone/data/energy/whitegoods deals; ask for an extension or apply for a .
7. Free trial periods... for a limited time
We’ve all been suckered in to these - the latest streaming service, the ‘free’ express postal delivery, the hot new sports/social media/dating app … They lure you in with a free 4 week period (but you have to provide your credit card details) and then automatically charge you after the trial period – unless of course you remember to cancel your membership when the trial period concludes. And who remembers to do that? Before you know it you’ve got a collection of 20 domain names you don’t want, ad-free music streaming your never use, express post insurance you used once at Christmas time and have been paying $9.95 every month since. Be aware, trial periods can bite!
Need help? Visit the National Debt Helpline or call 1800 007 007 for smart ways to reduce financial pressure today.