PAY $73,000 MORE
In 2014 alone 332,000 investors borrowed an average of $430,000 in interest only loans to buy Australian real estate.
Over a typical 25 year loan* those investors can expect to pay an extra $72,953 dollars each in interest on average.
[* assuming 5%p.a., a 10 year interest free period and $10 per month fees.]
WATCH THOSE “T & C”s
Often direct debits from a credit card are linked to a contract for goods or services which you have purchased.
As such it may be a term of the contract that you pay by direct debit. You could therefore be in breach of your contract if you cancel the arrangement. Make sure you check the terms and conditions, and if necessary seek professional advice.
Note also that cancelling a payment arrangement may not relieve you of your obligations under your contract with your biller. Check the cancellation terms and again… if necessary seek professional advice.
JOIN THE TREND
Debit cards are now the most common payment option in Australia.
RBA statistics for 2013 show $3.22 billion in debit card transactions, around 15% more than the previous year and double the value of credit card transactions.
WORRIED ABOUT ONLINE SHOPPING?
Most credit cards offer protection against purchases made without your consent and have special clauses to include online purchases.
Many also offer additional pass or PIN code protections for online payments.
This is particularly valuable if you are purchasing from overseas sites.
KISS YOUR INTEREST FREE PURCHASE PERIOD GOODBYE
Your ‘up to 55 day interest free’ period (which is really a ’25 days from the statement date’ period) only operates when you pay off the full balance by the due date.
So if you only make minimum repayments you’ll never get any interest free period at all.
This is one to think about before 30 June. If you need to borrow to contribute $1,000 to invest in your superannuation, in order to receive the $500 Government co-contribution (and you’re confident you can pay the loan off quickly) it may be worth considering.
GET RICH QUICK
Whenever you hear those words, back away.
If it looks like a duck and quacks like a duck…
…if anyone suggests an investment that looks or sounds like it might be a ‘get rich quick’ scheme, a ‘no brainer’, ‘you can’t lose with this one’, be very, very cautious.
Get rich, sure, but do it the smart way… get rich slowly.
Switching home loans could save you money and give you the flexibility you need to allow you to better manage your finances, but you may end up worse off if you’re not careful. Read Refinancing Pros and Cons before you decide.
A NEW CAR? A WELL DESERVED HOLIDAY?
Refinancing could let you use the equity you’ve built up in your home to renovate, or replace that aging car, maybe even sneak off for a holiday overseas.
But that would also increase your debt and make the amazing power of compound interest work harder against you.