Life can get very busy so it can be easy to forget things or let things slide. Maybe your annual dental check-up was meant to be six months ago and you still haven’t made an appointment or maybe you remembered your best friend’s birthday a few days late.
Then there are things that you might be forgetting that could end up hurting your hip pocket such as not paying your car registration by the due date or not using a gift card before it expires.
Canstar has crunched the numbers to show how forgetfulness could be costing you money – potentially to the tune of $4,567.
The numbers are based on hypothetical scenarios (and the costs may be higher or lower for your situation) but these demonstrate how quickly things can add up. Plus we offer some ideas to help you avoid these potential traps.
1. Forgetting to pay your car registration
You might remember the days when you had a registration sticker on your car that showed the date your rego would expire. Not having that sticker there means you no longer have that prompt reminding you of the due date. In NSW registration stickers were removed in 2013 and in the first five years fines for driving unregistered in NSW totalled more than $205 million according to the Sydney Morning Herald.
Renewal notices are usually sent in the mail or email at least one month before the due date. It’s also important to remember to notify the relevant authority in your state if you have moved house or changed your email address so that it can be sent to the right address.
Fines for driving an unregistered car vary depending on what state you live in but in NSW it will set you back $686. And when a vehicle is unregistered, Compulsory Third Party (CTP) insurance is usually not valid which also attracts a $686 fine, bringing the total to $1,372.
Potential cost: $1,372
Possible solution: When you receive your paperwork make sure you file it away and also put a reminder in your calendar linked to your phone or email so that an alert pops up. You may also want to check with your local authority if you can register for a reminder service to receive an email or text in the weeks leading up to the due date. Another idea is to stick a note with the date somewhere visible in your car.
2. Letting your term deposit automatically roll over
Term deposits can be a good option if you want to stash some cash away so you can’t touch it but it’s important that you don’t just set and forget. You may get a reminder before the maturity date but if you don’t respond the term deposit may automatically roll over for the same term – but not necessarily the same rate. You run the risk that the new rate may be lower or simply not the best rate available at that time.
Canstar crunched the numbers assuming you have deposited $25,000 into a six-month term deposit with the average rate of 0.88%pa. If you let it automatically roll over for another six months at the average rate when the term ends you’d have earned about $221 in interest at the end of 12 months. If, on the other hand, you transfer the balance to a new six-month term deposit with the highest rate (currently 1.41%pa) the total interest earned over 12 months would be about $287 – so about $66 more. It might not seem like much but every bit counts.
|Difference in Interest Earned over 12 Months on 6 Month Term Deposits
Allowing average interest rate to rollover vs Shopping around for a better rate
|Scenario: You have deposited $25k into a 6 month term deposit with the average rate (0.88% p.a.), when the 6 month term ends you…||Total Interest Earned After 12 Months|
|Do nothing, leave balance to rollover to another 6 months at the average rate||$220.79|
|Transfer balance to a new 6 month term deposit with the highest rate (currently 1.41% p.a.)||$287.18|
|Source: www.canstar.com.au – 4/08/2020. Based on a deposit balance of $25,000. Based on non-compounding 6 month term deposits with interest paid at maturity. Scenario calculations use current rates and assume there will be no rate changes in the next 12 months.|
Potential cost: $66.39 in a year
Possible solution: Again a simple calendar reminder can come to the rescue here. Set it for a few weeks before your term deposit is due to mature to give you time to shop around for the best rate. It’s also worth checking if the financial institution offers you the option to set an SMS or email alert reminder.
3. Not cancelling free trials
Free trials sound like a great idea – you get to sample something without paying. Well that’s the theory anyway. Most free trials require your credit card details and if you don’t cancel the service when the free period ends you’ll be charged. Now that’s fine if you enjoyed it and want it to continue but not so much if you have no intention of using it again.
A friend of mine had signed up for a free trial of Audible and forgot to cancel it for roughly a year costing her close to $200. Luckily as she could prove she had not actually used the service she scored a refund but that won’t be an option for every type of free trial.
If you had signed up for a free trial of something that cost $15 a month but had paid it for a couple of months before you had noticed you’d be $30 out of pocket.
Potential cost: $30
Possible solution: Check if you can cancel it as soon as you sign up and still keep using the service for the remainder of the trial period. If that’s not an option then make sure you pop a reminder in your calendar to be alerted a day before it ends.
4. Missing the due date on your bills
We have so many bills these days that it can be easy to miss the due date but even paying a day late can end up costing you depending on the type of bill. Many service providers charge late fees.
Some electricity plans have a pay on time discount which you’ll miss out on by paying late so that’s another potential cost of paying late.There is also the risk that if you are very late paying your bill it could end up as a default on your credit report which could make it harder to get a loan in the future.
|Late Payment Fees on Selected Products|
|Credit Cards||NBN Plans||Electricity|
|% that Charge a Fee||92.6%||61.5%||42.2%|
|Of those that do charge a fee…|
|Source: www.canstar.com.au – 4/08/2020. Credit cards: based on personal, unsecured cards. NBN: Based on NBN plans with a premium speed tier. Electricity: Based on single rate electricity plans available in Sydney NSW (Ausgrid network).|
Let’s say you miss just one credit card payment you could end up being hit with a $20 late fee.
Potential cost: $20
Possible solution: Arrange for your bills to be paid via direct debit so that you don’t have to remember the due date. That said you’ll still need to make sure you have enough funds in the account. Consider setting up a special bills account just for direct debits and depositing money from each pay to cover your bills.
5. Not using a gift card before it expires
Some people think gift cards are fantastic while others might not be fans but either way it’s a shame to let them go to waste if you are a recipient. The good news is that from November 2019 gift cards must be redeemable for at least three years after the date of purchase which gives you more time to use them and hopefully makes it less likely that the money will go to waste.
If you had one $50 gift card lying around that you don’t use before it expires that is $50 gone.
Potential cost: $50
Possible solution: Keep the gift card in a prominent position in your wallet so that you can easily see it when you go shopping which may prompt you to use it. It may also be a good idea to diary a recurring alert – maybe once every few months. If you think you’re unlikely to use it in time then consider selling it but be prepared to lose some of the value.
6. Leaving your money in a savings account after the promotional period ends
Rates might be at historical lows making it much harder to get a decent return on your savings but that doesn’t mean you should be complacent. In some ways it may now be more important than ever to chase a better return on your savings.
One way to do this is to take advantage of savings accounts offering special promotional rates for a certain period of time. Generally these are only available to new customers though so it may mean switching providers each time the introductory period ends. It doesn’t take long to open a new account so it shouldn’t be a hassle – the problem is forgetting when the promo period ends and leaving the money in that account earning the lower ‘base’ rate.
Canstar found that you could potentially be worse off by $81.25 over 12 months if you left your money in an account after the promo period ended instead of transferring your balance to an account with the next highest total rate when each promo period ends.
|Difference in Interest Earned over 12 Months on a Flexible Savings Account
Staying in Account After Promo Period Ends vs Chasing the Best Rates
|Top 3 Flexible Saving Account Total Rates|
|Provider||Account||Base Rate||Promo Rate||Promo Period||Total Rate|
|Heritage Bank||Online Saver||0.80%||1.40%||4 months||2.20%|
|Macquarie Bank||Savings account||1.35%||0.65%||4 months||2.00%|
|Rabobank||High Interest Savings Account||0.55%||1.45%||4 months||2.00%|
|Scenario: Deposit $10k into a flexible savings account with the highest total rate, and then when the promo period ends…||Total Interest Earned After 12 Months|
|Do nothing, leave balance in same account||$127.39|
|Keep transferring balance to the account with the next highest total rate when each promo period ends||$208.64|
|Source: www.canstar.com.au – 4/08/2020. Based on a deposit balance of $10,000. A flexible savings account is one which allows flexible access to balance whilst paying an interest rate. Terms and conditions may apply to promo rates, refer to the provider’s website for more information. Top 3 list sorted in descending order by total rate, followed by base rate. Scenario calculations use current rates and assume there will be no rate changes in the next 12 months.|
Potential cost: $81.25 in a year
Possible solution: Popping a reminder in your calendar is probably the best option in this situation. Make sure you give yourself enough time to compare deals to find the best-paying account available.
The comparison table below shows some of the Savings Accounts on Canstar’s database for a regular saver in NSW with links to the providers’ websites. The results shown are based on an investment of $100,000 in a personal savings account and are sorted by Star Rating (highest to lowest), then provider name (alphabetically). For more information and to confirm whether a particular product will be suitable for you, check upfront with your provider and read the Product Disclosure Statement before making a decision.
7. Paying for services you are no longer using
Gym membership anyone? That is probably one of the most common examples of people paying for a service they are no longer using – even if they have the best intention to start going again. Others include streaming services you have lost interest in but are still paying for, subscriptions to magazines or newspapers you are no longer reading and apps you may have subscribed to.
Let’s say you’re paying $60 a month for a gym membership that you have not used for three months – that is $180 down the drain.
Potential cost: $180
Possible solution: Scan your bank and/or credit card statements on a regular basis to make sure there are no recurring payments coming out for expenses that you may have forgotten about. If you spot anything then get in touch with the relevant provider to cancel it.
8. Not shopping around at renewal time
When your insurance is due for renewal can be an ideal time to shop around for a better deal but many people aren’t. More than three quarters (79.4%) of general insurance policies were renewed with the same company without approaching any other companies in the 12 months to March 2019 according to Roy Morgan’s General Insurance Industry Market Overview Currency Report.
If you are paying by the month it can be easier to forget to shop around because the payments keep coming out of your account and you are still covered but this can end up costing you big bucks.
As the table below, compiled by Canstar, shows the difference between the average car insurance premium for a 30-49 year old in NSW is $1,250 but the lowest is $677 so you could potentially be paying $573 more a year by not switching. And the potential savings are similar for hospital cover ($634) and home and contents insurance ($535). Add all three together and it comes to $1,742.
|Potential Annual Savings – Switching from Average to Lowest Annual Insurance Premium|
|Car Insurance||Gold Hospital Insurance||Home & Contents Insurance|
|Source: www.canstar.com.au – 4/08/2020. Car Insurance: based on comprehensive policies rated in the Canstar 2020 Car Insurance Star Ratings. Premiums are based on a 30-49 year old in NSW and include quotes for both new and used cars for a range of scenarios, with a target excess of $700. Hospital Insurance: based on Gold Hospital policies available for a single in NSW, with all excess options considered. The Australian Government Private Health Insurance Rebate, Base Tier for under 65s, of 25.059% has been applied to premiums. Home & Contents: based on quotes for a range of scenarios obtained for the 2019 Home & Contents Insurance Star Ratings. Premiums based on sum insured values of $550,000 for building and $50,000 for contents, with a target excess of $500.|
Potential cost: $1,742
Possible solution: If you get a renewal notice then set aside some time to shop around before paying it. Even if you are paying by the month you should still do the same thing.
9. Letting food go to waste
This is something most of us are probably guilty of at one stage or another. It could be because you have forgotten food at the back of the fridge or in the freezer and it’s gone off by the time you find it. Or maybe you have bought more of a particular item because you didn’t realise you already had some but you can’t use it all before the expiry date. Not finishing meals and tossing the leftovers in the bin is another example.
Rabobank’s 2019 Food Waste report shows that Aussies are wasting 13% of their weekly grocery shop, costing the average Australian household $1,026 a year.
Potential cost: $1,026 a year
Possible solution: Plan your meals and when doing so take a look at what you have in the fridge already and organise meals accordingly. Also make sure to check what you have at home before going to the supermarket to avoid double ups. If you have cooked too much food but don’t feel like having the meal as leftovers the next day then consider freezing it for another time.
About Effie Zahos
Canstar’s Editor-at-Large, Effie Zahos, has more than two decades of experience helping Aussies make the most of their money. Prior to joining Canstar, Effie was the editor of Money Magazine, having helped establish it in 1999. She is an author and one of Australia’s leading personal finance commentators, appearing regularly on TV and radio.
Main image source: Krakenimages.com (Shutterstock)