Watch Your Budget in 2008
Veda Advantage’s tips to avoid over-committing financially in 2008.
Veda Advantage, Australia’s largest holder of credit-related information, suggests Australians use the first quarter of the year to set a budget and review their financial commitments for 2008 to avoid over-committing financially.
“January is the time when the post-Christmas hangover really sets in and people can start regretting any overspending during the festive season,” said Erica Hughes, Veda Advantage’s General Manager of Information, Services and Solutions. “It can be shocking to return to work from the end-of-year break, to check the credit card balance, and compare it to the original budget. For many Australians financial circumstances may be made more challenging this year by the pressure of interest-rate rises, and recent stock market falls.”
The rush towards taking on extra credit facilities just prior to Christmas can result in some Australians spending beyond their means. Veda Advantage’s recent Credit Spending Study, identified those who applied for credit in the final months of the year as being the most likely to default on their credit card or personal loan repayment in the following year. Of the individuals who made a credit or personal loan application in November and December, 3.1% respectively had a default recorded on their credit file within the following 12 months, compared to 2.5% of individuals who made applications in January and 2.4% in February.
“Along with people making New Year resolutions to get fit or quit smoking, my experience is that people also make promises to curb using their credit card excessively, and reduce their debts in 2008. Our tips are aimed at helping people achieve those resolutions, especially if we’re heading for tough times in 2008,” said Ms Hughes.
“Getting a default listed on your credit file because you can’t repay your bills on time is a serious matter. A lot of people are unaware that their ability to buy a house, a car, or even get a new phone often depends on their credit file – and if your credit file has a default on it, it may be harder to secure the credit you want to live a certain lifestyle. Defaults are a serious matter that can be avoided by spending sensibly, and not beyond your means,” she said.
Veda Advantage has formulated the following tips to help people pay their bills on time this year:
• Detox your credit card – Try to take a break from spending in the first few months of the year to even out the balance on your card and bring it back to a realistic repayment schedule.
• Budget - Sticking to a budget is often difficult, however simple measures including setting aside money to repay bills and credit in earlier months of the year can save you from over-spending.
• Plan – Consider taking out a special "Christmas 08" savings account with your bank or financial institution and put a small amount into that account each month.
• Reduce interest you pay. If you have credit card debt or another high-interest loan, try to pay off your loan to avoid the high-interest penalties. Then try paying with cash for a while to ensure you can afford purchases.
• Re-evaluate – If you have trouble with repayments, take time to reflect on your incoming and outgoing expenses may show you how it’s possible to cut costs, reallocate resources and improve efficiency.
• Pay your bills on time – to avoid a default being listed on your credit file it is important to do everything you can to pay your bills on time.
• Ask – if you do have trouble repaying your loans don’t be afraid to seek advice. Financial institutions have programs to help you in times of trouble. It is in a bank or financial planner’s interest to help rescue personal finance or business, and ensure you repay the money owed – before it becomes too late.
• Research – if you are thinking of applying for a new lower-interest credit card and transferring your balance onto that new card, make sure you understand what the interest terms are in 6, 12 and 18 months.
Ms Hughes also advised people to obtain a free copy of their credit file from Veda Advantage in order to keep track of their credit histories.
- ENDS-
For more information please contact:
Sally Robertson: 0400 927 003 or 02 9270 0233.
About Veda Advantage – www.vedaadvantage.com Veda Advantage facilitates credit reference checks for Australia’s major banks and lenders and underpins the ability of consumers to exercise choice in relation to consumer credit products. The vast bulk of applications for consumer credit in Australia are checked against the 14 million personal credit history files held by Veda Advantage.
You can apply for a copy of your credit file at www.mycreditfile.com.au or by calling 1300 762 207. A $27 express delivery service fee is payable if the file is needed urgently, or otherwise the file will be available within 10 working days.