This is not an article we ever imagined writing – but unfortunately, here we are, in the midst of challenging and changing times. Thankfully, the government, the banks are gearing up their financial relief strategies. However, as we work through this together, we encourage one thing: please carefully plan for your financial future as no one knows when this pandemic will end.
Be honest – can a credit card help during this crisis?
Yes, a credit card can help if you:
- Have a credit card with debt you're worried about paying off. Now is undoubtedly the time to take advantage of a balance transfer offer. This essentially means you'll move your debt from your old card to the new card and won't pay interest on the balance for a certain amount of time eg. 22 months. That is a LOT of peace of mind given the current financial climate and we wholly encourage Australians with debt to consider this now while you can.
- Find yourself needing to make a large purchase or lots of little ones (either now or in the future) or would like a backup option should your disposable income change. If so, a 0% purchase card would be useful. This means if you buy something on your credit card you won't pay interest on it for a certain amount of time eg. 15 months. It perhaps isn't ideal, but it acts as a good security blanket or contingency plan should your income take a hit.
- Are certain to retain job security and enjoy collecting Frequent Flyer points. Let's be honest, you will not be flying anywhere overseas anytime soon but this doesn't mean you can't earn points for the future. Also, you can use your points to travel domestically or to cash in on retail items through somewhere like the Qantas Mall.
No, a credit card can't help if you:
- Know you will be unable to meet the minimum repayments. If this is the case, do not apply or it will damage your credit score.
- Are currently unemployed or cannot demonstrate consistent income.
Why should I think long-term if no one knows when this crisis will end?
Actually, the fact no one knows when it will end is precisely why you should think long-term. Right now life may be relatively normal, but in uncharted waters, unfortunately, things can change quickly. For example, if your partner lost their job, your disposable income would drop drastically. Let's say you have enough income to cover your mortgage and daily expenses for your family, but two months from now you need rego, new tyres, a clutch replaced and then find out your washing machine is starting to break.
These are the things we forget to think of. And in a time of crisis, at that moment we wish we'd planned ahead. Of course, having lots of cash saved for situations like this is the wisest thing, but unfortunately, not everyone is in that situation.
0% on Balance Transfers for 22 Months!
0% p.a. for 22 months on balance transfers with no Balance Transfer fee (reverts to cash advance rate).
Earn 3 additional bonus Velocity Points per $1 on your everyday spend in the first 3 months (capped at 10,000 Points per month).
Receive $129 Virgin Australia Gift Voucher each year (spend criteria, Terms and Conditions apply).
Half annual fee of $64 p.a. for the first year ($129 p.a. thereafter).
This credit card offer is subject to change and may not be directly related to the content of this article.
I'm worried I will lose my job. Should I get a credit card while I have income?
- Yes, if you have debt on an existing card(s) then yes you should definitely get a balance transfer card now while you can provide proof of employment and payslips to the lender.
- No, if you have no savings and no de facto partner (for a combined disposable income) then getting a credit card will only lead you down the rabbit hole of incurring debt with no means to pay it off.
- Yes, if you have a de facto partner or savings so you'll have a way to pay off the minimum amount due each month. Of course, this totally depends on how much money you have saved and if your partner's job will also be secure. If you're in this situation, it's best to only consider a 0% purchase card or a balance transfer card.
Does a COVID-19 financial assistance package exist?
Yes, it absolutely does. The "Big 4" each have different options as part of their individual packages.
In an official Australian Banking Association (ABA) statement, CEO Anna Bligh said: “Banks stand ready to support customers and if anyone is in need of assistance, they shouldn’t wait but come forward as soon as possible.”
At present, most of the banks have a comprehensive package in place for business owners. However, if you're just a regular Aussie that needs some help you can also find it by contacting your bank or start with the ABA’s financial difficulty page. If you’re not banking with an ABA member, seek out your bank’s customer assistance phone numbers or recent announcements about their approach to Coronavirus. Also, some of the announcements will appear as notifications in your online banking app.
Why are some credit cards not available on your website anymore?
Unfortunately coronavirus has caused the closure of many call centres across both Australia and the world. This means the banks are trying to find a better way to process customer enquiries while their staff work from home. As a result of this, lenders are struggling to deal with the mass amount of calls they're receiving and cannot faciliate anymore calls for new card applications. This means several cards that normally feature on our website have been paused until the banks fix the call centre issues they're currently having.
What you can do?
From all of us here at Credit Card Compare we hope you and your loved ones stay safe and healthy.
In uncertain times like this, you will undoubtedly start to think about how much of a hit your personal finances will take.
To combat that sense of helplessness here’s some things you can do:
- Log into your accounts - get a read on where you're at with all your money across your credit cards, home loan, bank accounts, super etc.
- Trim back on non-essential items - anything you don't really need right now – don't buy it. Yes, this also includes hoarding!
- Track your credit score for free - sign up on our website or download our Credit Health app for iOS & Android so you know where you stand.
- Prioritise your bills and keep paying them on time so you don't damage your credit score and future lending power once the pandemic is over.
- Get a balance transfer card - perhaps you’ve been too busy to do it but now is the time to transfer any credit card balance being hit with high interest over to a new card. Lock it in at 0% for as long as 26 months – this means you'd pay no interest on your debt until 2022.
If you are strugglingIf you’re struggling to pay your credit card or think that it won’t be long until you do struggle then don’t be afraid to talk to your bank or credit card company. They have hardship programs for customers who get into difficulty. In times like this, they are making even more sweeping provisions to help people to restructure repayments, lower your interest rate, waive fees or increase credit limits.
Should the pandemic continue, we suggest that you arrange to talk to your accountant over the phone and speak with your bank.
If you are a subcontractor or casual worker without work you may be eligible to register with the enhanced Centrelink Jobseeker support.
Finally, if you are in severe financial hardship, you can contact your superannuation fund about getting your hands on your super. Although you'd need to think long and hard about that and take professional financial advice first.
Recessions are not new.
People are resilient.
Faith casts out fear.
And please, take care.