repayments

How to manage your repayments like a boss

How big does an unexpected cost have to be for your finances to fail? According to recent research from Finder, if home loan interest rates rise just 0.45 per cent, more than half of Australian mortgage holders wouldn’t be able to handle it.

“With mortgage rates on the rise, it won’t take much for borrowers to be in trouble,” explained Finder’s resident money expert Bernie Hassan.

The thing is, over time, interest rates (be they on home loans or credit cards) are going to go up. It’s the nature of the economy. To help you avoid these increases making you spin out of control, here’s how to manage repayments like a boss.

1) Pay in full, pay in advance

If you’re using a credit card, try and pay off each month’s debt in its entirety. This minimises the amount of interest you pay and prevents debt from stacking up over time.

Likewise, with a home loan you might want to try upping your loan repayments in small increments. Even increasing these by $10 a month to begin with will add up, and begin to reduce the financial pain that could happen with interest rate rises.

It’s worth noting that interest rates often increase in small increments. The 0.45 per cent hike identified by Finder as a breaking point for many people may not happen all in one action, but in small increases like 0.25 per cent at a time. Getting ahead of this could pay dividends.

2) Make the most of balance transfers

If you are struggling to manage repayments on a credit card, a balance transfer could be one way forward. This is where you shift the outstanding debt on one card to another with a lower interest rate.

While this is a way that many banks and lenders try and hook people into fresh debt with new fees, being smart about it can see you manage repayments much more efficiently. Many cards have limited periods with reduced or zero interest on transfer balances, giving you a grace period to get cracking on your debt.

3) Keep records

It’s hard to see the big picture sometimes. Paying bills and debts week in, week out while managing your consumer finances can make it difficult to see how much money you are spending, and where.

Try tracking your spending (rent, mortgage payments, credit cards, good and services, luxuries) over a fortnight or a month. Can you identify where your spending is spiking? Do you know why you’re spending that much?

We often don’t stand back and take stock of our spending behaviour, and how we can change it. Keeping records is a great first step for this. Try out our budget planner as well which helps take control of your wallet.

Want to find out more about credit cards, home loans or just managing money in general? Get in touch with the team at Beyond Bank.



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