End of financial year credit card tips
Shop smarter, get your debt under control and start the new financial year right with these tips.
This time of year brings some of the biggest sales as retailers around Australia get ready for the new financial year. While these deals can offer huge savings, they also make it tempting to spend up big – especially if you're expecting a nice refund when you've done your tax return. If you're struggling with existing credit card debt, it can also be a good time to consolidate and repay your balances with a 0% balance transfer credit card.
You can use this guide to pick up tips whether you're taking advantage of end of financial year (EOFY) sales or getting your current debt under control.
Tips for using a credit card in the EOFY sales
- Be selective with your shopping. Going overboard on sale items is one thing, but going overboard on sale items when you don't need them and paying interest on them is another. So make sure the purchase is something that'll get you to your goals and is within your means so that you can pay it off in full before you're charged interest at the end of the statement period.
- Take advantage of interest-free days. If you regularly pay your card's balance in full by the due date on your statements, you should have access to a set number interest-free days. The maximum number of interest-free days are available at the start of each statement period, so check when this is to find out how long you'll have to pay off EOFY purchases before interest is charged.
- Consider a card with 0% p.a. on purchases. If you want longer to pay off your purchases or aren't eligible for interest-free days, you could shop around for a card with an interest-free promotion. At the end of the introductory period, the standard purchase interest rate will apply to any remaining balances and you should aim to repay your balance in full before then.
- Earn rewards for your spending. If you have a reward or frequent flyer credit card, you could use it to earn points for most EOFY purchases you make. Just keep in mind that some purchases, such as gift cards or foreign cash, may not be eligible to earn points.
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Hack: How using a credit card could make it easier to do your tax return
If the thought of organising your tax deductions is already frustrating you and you're disciplined enough with your spending, you could consider using a credit card for these transactions. Having a designated credit card you only use for tax-deductible expenses is one way to provide proof of these purchases when it comes to scoring some deductions. If you don't already have one you can compare them here.
Paying your tax bill with a credit card
If you're planning to use your credit card to pay the Australian Taxation Office (ATO), be aware that a card payment fee will apply. Check out this guide on paying the ATO with a credit card for more information. If you also want to earn reward or frequent flyer points for your payment, check that your credit card is one of the few that offers points for payments to the ATO.
Tips for using a credit card to manage your debt
- Use a balance transfer card. If your credit card debt is collecting interest, you could move it to a card with 0% interest on balance transfers for a promotional period. The interest-free periods can last up to 26 months and at the end of the promotional period, you'll be charged a higher revert rate. If you pay your balance in full before you're charged interest, it can be a useful way to repay your debt quicker and save on interest costs.
- Consolidate your debts. If you have more than one credit card, you can also consolidate your debt with a balance transfer card. Not only will your debts be easier to manage under one account, but you'll also save by paying no interest on your combined balance.
- Avoid making purchases. Balance transfer cards usually charge high purchase interest rates. You also won't access interest-free days if you're paying off a debt from a balance transfer, so it's wise to avoid making purchases and to concentrate on clearing your current debt.
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