It is rare these days to have a bank that gives you anything other than an interest paid statement in the mail.
Yesterday I received a letter from the NAB to say that they needed to raise the interest on our investment property loan by 0.29% because the ‘market conditions have changed’. Yet the Reserve Bank have kept interest rates on hold. As such I can only look on such a move with skepticism.
ING Direct, on the other hand, have done nothing but surprise me with their level of service and financial credits. First, my dad referred me to them and we both received a $50 credit when I joined. Nice! Next I had 6 months as an introductory gift where I received 5% back for any PayWave purchases under $100. Now that the 6 months have come and gone we still receive a little kick back in the form of a 2% rebate on PayWave purchases under $100.
2% doesn’t sound like much but it is nice to see all these cumulative credits appearing in your account rather than constant debits. It also amounted to $283.67 in the last financial year alone.
While that might not seem like anything to write home about, let alone blog about, it does bring to question how much the average person actually gets back from their credit card rewards.
I looked into a few credit cards last week, crunched some numbers and found that most did not offer a cash reward but rather a store credit system and charged for the privilege of having their rewards card.
I also rang a few lenders to query the cash rewards that they offered and found that most could only really offer 0.6% back on each dollar spent using their card. This would mean I would need to have spent $47,278.33 to recoup the same gains made though ING.
There are a few catches with the ING Direct card however:
• You need to have $1000 deposited monthly into the account.
• The account carries no interest that I know of.
• The card is only a debit card and offers no credit function (Read: This will keep you out of trouble!)
The ‘no interest’ component means that you need to actively make your money work for you. What I mean by this is that you need to scoot your deposits elsewhere to lower the interest payments on some of your debts or to be deposited into savings to earn interest. It would be a bad move to leave $10,000 sitting there earning no interest and would probably erode any potential gains.
Let me know if you know of any other banks offering such services in the comments box below.
Note- I am not affiliated in any way with ING Direct but I do like the cut of their jib! At the time of writing I also discovered that while they no longer offer the 5% rebate on PayWave, the 2% rebate still applies however, and they are offering $75 to new sign ups. Hope that helps.

We live in a digital age. Numbers are constantly changing in our accounts. Up, down. Fifty-three cents credit, ten dollars out, a thousand dollars gone in the blink of an eye.

Think back to when you were younger. Remember that collection of coins you used to have in your piggy bank? How did you spend your money? What kind of considerations did you have to go through to manage your money? Were you a saver or did you blow your money straight away? Either way, those coins and notes meant a lot to you and you knew they were in a finite supply.

It is so incredibly easy to simply tap your card, swipe it in a machine, or use your phones or computers to move large sums of money around in an instant. The problem with this is that we become disassociated with the value of money. Think about buying a $1200 laptop. Which is easier- handing over a card or handing over cash?

Here’s 3 money saving tips that will make your dollars go further!

#1 Pay in cash.

Yes, I realise that cards allow you to get points, interest free terms for 30 days, maybe special shopping credits. Don’t be deluded into thinking that these are a gratuity. Banks know you spend more when you use your card and the massive interest rates on credit cards outweigh any benefits.

#2 Put aside an allocated weekly amount at the start of each week.

Having the weekly budget in cash ensures that you don’t put on hold your savings goals. Put it in a safe place away from kleptomaniacs.

#3 Keep an weekly ledger.

A weekly ledger is a recording of all the ins and outs of your financial transactions. Write down each and everything you spend. Some might be big items like vehicle registrations, insurance items etcetera that should be factored into your annual budget. The weekly spends like a $5 coffee, take away pizza, groceries and so on should be recorded on your budget. If you do need to pay for a bill or move money online, make sure you record it on your budget and take the money out of your weekly cash.

Remember- the reason you are saving money is for the purposes of investing in your financial future. A dollar invested can have a massive compounding effect.

Do you need a credit card?

No. No you don't. Cut the thing up now!

I am an ex-owner of multiple credit cards. To be honest, I don't really remember actively seeking them out. They found me!

As a young twenty something who had gone through a few rough financial patches the idea of a piece of plastic that could 'bail me out' if an unexpected event occurred seemed like a sensible idea. The paperwork was practically non-existent. All I had to do was sign on the dotted line and I had 3 credit cards within the week.

I had envisaged using the card only in situations like I needed an emergency spleen transplant. Plus they had all these amazing points that would save me money. What's not to love? In 3 years if I spent lots on the cards I could have enough points to fly to Sydney.

They also waived the $110 fee x 2 (for my wife and I) and the $88 fee on the other card for the first year.

It got better. They even gave me 55 days interest free. If I was super clever and paid off the credit card at the 54th day, I would be one clever cookie.

The problem was that I did use it. Not a lot at first, but little by little. I also forgot to pay it back by the 54th day. It was hard to remember what product you purchased when too. We were also building and there was a lot of other costs associated. Putting it on the card earned us points. Subtle, subtle poor money management began to creep in.

At the end of two years we had nearly $25,000 on our credit cards at 18% per annum.

We eventually sold the house and moved somewhere more affordable. We cut up the cards and realised the hidden curse in a credit card.

So what do we use now you ask? Debit cards.

Debit cards have the exact same features as credit cards and you can use them exactly the same. There are no points though, but no fees either. No interest expense, but a small interest amount is earned.

The only catch, if you can call it a catch, is that you can only spend what you have earned.

This is budgeting 101. Only spend what you earn. This is the key to improving your savings potential.

I understand that some people could potentially use them to their advantage and capitalise on the incentives, BUT... the banks are banking on you losing out.

The average American owes $15,706 on their credit cards!

Source: https://www.nerdwallet.com/blog/credit-card-data/average-credit-card-debt-household/

Cut them up!