CASH OR CARD? CHOICES FOR THE FESTIVE SEASON
As we head into the silly season it’s important to adopt smart strategies for Christmas spending.
Stores are stocked with trees, tinsel and trinkets - a sure sign it’s time to make plans for the annual Christmas spending splurge. The season to be jolly isn’t so much fun if unplanned spending in December sees you strapped for cash in the New Year. So rather than simply hoping it’ll all work out, try writing up a festive season spending list so you can plan your spending needs. Note down how much you want to allocate to gifts, decorations and all the trimmings. The more detailed you are, the more you’ll be able to avoid last minute spending shocks – and still manage regular expenses like the mortgage or rent.
Cash is king
Armed with a firm idea of your likely spending over Christmas, the next step is to consider how you’ll pay for it all. Using cash has advantages, the key one being it can give you more visibility over what you’re spending. Having a savings account dedicated to Christmas may make it easier to isolate holiday season spending and help you stay on track with your Yuletide budget. Using a debit card connected with a transaction account is another way to avoid getting into debt.
An ideal way to save for Christmas
Online savings accounts provide an ideal way to save for specific goals plus your money is available 24/7, so you can withdraw it via internet banking when you need. ME Bank’s Online Savings Account is completely fee-free and because it costs nothing to establish you can afford to open several accounts – each devoted to a different goal. Use the online calculator at mebank.com.au to see how much you need to tuck away each pay day to meet your Christmas budget.
Use cards wisely
If you’re planning a few big ticket purchases for Christmas or if it’s likely you won’t have the cash on hand to cover your spending budget, a low rate credit card may offer a solution. But it’s an option that needs to be approached with care. A 2012 survey# found one-in-two Australians plan to use a credit card for Christmas shopping and 80 per cent of these people hoped to pay off their card within the interest-free period. If you’re someone who pays their card off quickly then using a credit card shouldn’t be a problem – though do look for a card with low annual fees to keep costs to a minimum.
Look for a low rate, low fee card
If it’s unlikely you’ll be able to pay off all your card purchases before interest charges apply, it’s worth shopping around for a card with a low rate and fees. ME Bank’s MasterCard ticks both boxes with a low annual fee of $49 plus one of the lowest card rates available – just 12.25% p.a.* Unlike some banks, ME Bank charges the same low rate on both purchases and cash advances, minimising interest and saving you money. As a measure of how popular the ME Bank MasterCard is with ordinary Australians, it was recently awarded ‘Best Credit Card’ in Mozo’s 2013 People's Choice Awards, the only banking awards judged by customers. Even with a low rate card, it’s worth aiming to pay more than the minimum monthly repayment to help you clear the debt sooner and keep a lid on interest charges.
To find out more about putting your savings to work, call ME Bank on 13 15 63 or visit mebank.com.au.
#RateCity 2012 Christmas Shopping Survey. *Interest rate is current as at 7/11/2013 and is subject to change. Fees and charges apply. Terms and Conditions available on request. This is general information only and you should consider if these products are appropriate for you. Applications are subject to credit approval. ME Bank Pty Limited ABN 56 070 887 679 Australian Credit Licence 229500.