Start the new financial year right with these tips for using your credit card before and after 30 June.
So, if you're planning to use a credit card in the end of financial year sales, here you'll find tips on how to manage the balance. We also have insights from financial planner James Gerrard to help you manage your spending and turn over a new leaf from 1 July.
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Tips for using a credit card in the EOFY sales
If you're planning to pay with plastic in the sales, these tips can help you make the most of your card:
- 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.
- 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, take ten minutes to compare what's in the market. It's not difficult, and could see you get a card with better features than what you already have.
- 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.
- Shop around for sales. End of financial year sales aren't limited to department and retail-chain stores. Online stores and smaller retailers are also gearing up to clear stock, so get a list of what you need and be sure to compare the retailers before you pull out your hard-earned money.
- Use your tax refund wisely. If you're one of the lucky ones who gets your tax return early enough to use during the sales, spare a thought before you do. If you didn't need the item before the sales chances are you don't need it now.
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, there's a simple remedy – a credit card. 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.
EOFY advice from a financial expert
Q&A with James Gerrard
James Gerrard is a certified financial planner with over 17 years experience in the financial services industry. He is director and founder of the Sydney-based financial planning firm Financialadvisor.com.au and a member of the Financial Planning Association of Australia's CFP Board Certification Committee. You can find out more about him at www.financialadvisor.com.au.
finder: How can consumers avoid going financially overboard at the end of year financial sales this year?
James Gerrard: Just remember that sales occur several times [a year] and it's usually end of season and discontinued items that are substantially discounted.
Most desirable items are usually excluded from the sales or only marginally marked down, so most of the time, if you research and shop around, you'll be able to get a great deal (and better than the sales) any time of the year.
finder: What's the ideal way to make use of the end of financial year sales?
JG: Go to the sales with a list of what you want, a budget and discipline. Don't be the person who goes to Myer for a new pair of jeans and come out with handfuls of bags and a new wardrobe.
So if you're after a new pair of shoes for example, and are not too fussed about a specific brand or style, going to the sales might be a good way to save money and buy a pair while the sales are on.
Also, some shops offer interest-free finance which you can take advantage of. The only disadvantage is the massive interest rate that applies if you do not pay for the item by the end of the interest-free period. But as long as you plan for this properly and don’t go beyond the interest-free period, this can be a good way to purchase items.
finder: How can those in debt use the end of the financial year to get their finances back on track?
JG: Make a new financial year resolution! Look at how much you earn, how much you spend, and set goals for each month about how much money you could put aside. Once you have determined this amount, every time you get paid, the first thing you do is transfer money to the debt so you don't 'miss' that money after a while.
finder: How can you decide what to do with your tax return if you receive one?
JG: That's a hard one and depends on specific situations, but generally pay off the highest interest debt, work your way down, and if anything is left, save.
Generally the order from highest interest to lowest is as follows:
2. personal loans
3. car loans
5. savings account
finder: Any other tips for consumers this end of financial year?
JG: The Australian dollar is falling and expected to continue to fall which will make it more expensive for importers to bring items into Australia over the next 12 months. These increases are generally passed onto consumers. So if you're looking at buying a larger item like a fridge or washing machine over the next 12 months, the current sales may be a good time to purchase.
Also remember, if you spend more than $1,000 overseas on an online purchase, that item will attract duty and taxes when received in Australia so you need to factor that into the total purchase cost as you would shipping.
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