Your money and coronavirus: 10 steps to help you save and protect your finances

Worried about what the fallout of the coronavirus crisis could mean for your money? Here are 10 steps you could take right now to help shore up your finances.
how to save money
Source: Jacob Lund (Shutterstock)

1. Ask yourself if you could be doing better with your home loan

If you’re trying to cut back on some expenses, one possibility is to look closely at your home loan and how much you’re being charged. Interest rates are at historically low levels, so now could be a good time to compare and find a better deal. Analysis of Canstar’s database of over 4,000 products, shows that there is a 2.95 percentage point difference in the lowest advertised standard variable interest rate and the highest.  For an owner-occupier borrower paying back principal and interest on a $400,000 loan at 80% LVR over 25 years, refinancing to that lowest rate of 2.19% (comparison rate 2.19%) could:

  • save them up to $638 per month in repayments
  • reduce the total amount of interest paid over the life of the loan by more than $191,000.

Fixed rate loans listed on Canstar’s database also have a wide variance between the cheapest and highest advertised rates. Fixed rates are recorded as being as low as 2.09% (comparison rate 2.98%) for a two-year fixed loan at the time of writing.

Compare home loan rates for refinance

If you’re currently considering a home loan, the comparison table below displays some of the variable rate home loans on our database with links to lenders’ websites that are available for refinancing. This table is sorted by Star Rating (highest to lowest), followed by comparison rate (lowest-highest). Products shown are principal and interest home loans available for a loan amount of $350K in NSW with an LVR of 80% of the property value and that offer an offset account. Before committing to a particular home loan product, check upfront with your lender and read the applicable loan documentation to confirm whether the terms of the loan meet your needs and repayment capacity. Read the Home Loans Star Rating methodology for more info, or use Canstar’s home loan selector to view a wider range of home loan products. 

*Comparison rate based on loan amount of $150,000 and a term of 25 years. Read the Comparison Rate Warning.

→ How does your loan rate? Compare all home loans on Canstar’s database.

2. If you’re looking for a lower-risk place to keep your cash, take a look at some of the returns on offer

With Australia now officially in a recession, some consumers could be looking for a low-risk place to park their funds during this period of uncertainty. According to Canstar finance expert Steve Mickenbecker, there are a number of savings accounts and term deposits offering solid returns that could still be worth considering, despite the record low cash rate.

If you’re shopping around, be mindful of the conditions and withdrawal restrictions some institutions may place on deposit products in return for their sharpest rates. For example, you may need to deposit a certain amount each month and make no withdrawals in order to earn the bonus interest.

At a time of economic uncertainty, you might be wondering whether your money will be safe in the bank. The Australian Government guarantees up to $250,000 of funds per person in official Authorised Deposit-taking Institutions (ADI). That means if one of these institutions becomes bankrupt, the government will repay customers up to $250,000 of the total funds they have with that bank.

Canstar only lists ADIs in our savings, transaction and term deposit comparison database.

How does your return stack up? Compare all government-guaranteed term deposit accounts and savings accounts on Canstar’s database.

3. Capitalise on low rates: Is it worth consolidating existing debts?

If you are concerned about existing debt, staying on top of repayments or how much interest you’re accumulating, you may have some options available.

For example, it could also be a good time to consider consolidating your debts. This means combining multiple debts into a single loan or credit card, ideally one with a lower interest rate than your existing debts. At a time of historically low interest rates, this could be one way to save yourself money in interest while making your repayments more manageable.

Two common options are debt consolidation personal loans and credit cards that allow you to transfer the balances from other debts onto a new credit card. Below we have rounded up some of the options on our database for each of these debt consolidation techniques. Remember, though, that once you have consolidated your debt to a new loan or credit card, it’s generally a good idea to pay off the balance as quickly as possible.

In particular, be mindful that credit cards with a 0% balance transfer offer (sometimes with an accompanying fee attached) generally begin charging interest on the balance at a relatively high rate once the initial interest-free offer expires. It could also be a good idea to consider the annual fee or other fees charged, and – if possible – to avoid any new purchases on the card, as the provider could start charging interest on these purchases right from the start.

Compare personal loans

If you’re currently considering a personal loan, the comparison table below displays some of the unsecured personal loans on our database with links to lenders’ websites. This table is sorted by Star Rating (highest to lowest), followed by comparison rate (lowest-highest). Products shown are unsecured personal loans for the purpose of debt consolidation available for a loan amount of $20,000 in NSW with a duration of three years. Before committing to a particular personal loan product, check upfront with your lender and read the applicable loan documentation to confirm whether the terms of the loan meet your needs and repayment capacity. Use Canstar’s personal loan selector to view a wider range of personal loan products.

Compare credit cards

4. Could you be saving on your car and home insurance?

Insurance is designed to be a safety net if the worst should happen, and an outlay on the right insurance policy now could end up saving you money in the future. There are a number of ways that it might be possible to reduce the costs of your car or home and contents insurance premiums:

  • Find the best deal for the amount of cover you need – Insurance premiums are calculated on the value of the property that needs to be insured and the risk insuring that property represents. Different providers can often weigh up that risk differently, so it could be possible to swap insurers to find a lower price. For example, with home insurance, different companies could view the risk of robbery in a particular suburb differently. Be sure to read the Product Disclosure Statements carefully for any policies you’re considering, though, to ensure you are getting the cover you need.
  • Better match your circumstances to your level of insurance – If your circumstances have changed, it could be possible to renegotiate your level of cover with your insurer. For example, with car insurance, there are many people working at home right now, which means their car might not be needed for their usual commute. Some insurers consider where the car is parked when calculating what premiums will cost. If your car stays at home, in the safety of your garage, that could mean you may qualify for a reduction. If that’s not the case, it could pay to compare the cost of your policy with other providers that do offer that type of customisation.
  • Look for loyalty discounts (and check that they are worth it in the first place) – Taking out different kinds of insurance policies with the one insurer could sometimes make you eligible for a “multi-policy” discount. But it could also pay to check to see if that discount is actually worth it, by comparing what other providers could offer you for the same cover.
  • Consider changing your excess – Some insurers will allow you to change your excess, so you pay less in premiums but pay more towards the cost of repairs or replacement whenever you make a claim. However, it could be a good idea to consider your ability to pay that excess if other unexpected expenses arise at the same time.

Compare car insurance

If you’re considering car insurance policies, the comparison table below displays some of the policies currently available on Canstar’s database with links direct to the providers’ websites, for a 30-39 year old male seeking comprehensive cover in NSW without cover for an extra driver under 25. Please note the table is sorted by Star Rating (highest to lowest) followed by provider name (alphabetical). Use Canstar’s car insurance comparison selector to view a wider range of policies.

Compare home insurance

If you’re comparing home and contents insurance policies, the comparison table below displays some of the policies currently available on Canstar’s database with links direct to the providers’ websites, for an Australian aged under 50, seeking cover in NSW or ACT for a cost to replace building and contents of below $550,000. Please note the table is sorted by Star Rating (highest to lowest), followed by provider name (alphabetical). Use Canstar’s home insurance comparison selector to view a wider range of policies.

5. Review your super: Are you paying too much in fees?

Recent drops in the share market have taken a toll on many Australians’ super balances. Investment performance is a key factor to consider when determining how your super is tracking, and another important factor to look at is fees. If you’re looking to protect your nest egg at a time of uncertainty, making sure you’re not paying too much is one aspect of your super you generally have a bit more control over.

Super fees are often shown as a percentage of your balance, and as a result what may look like a small difference in the fees you’re charged per year could potentially translate to tens of thousands of dollars of retirement funds saved or lost by the time you’re eligible to cash in your super.

Compare superannuation

6. Plan B: What can you do to protect your income?

Understandably, many Australians are concerned about job security at the moment. Insurance is generally designed to protect people against the impact of certain unforeseen events. So, customers should consider checking with their provider about the extent to which a new income protection policy might cover them in the event that their income is impacted should they fall ill due to coronavirus, or if their policy includes any additional cover for involuntary redundancy and whether that might apply in the current situation. It could also be worth asking your insurer about any relevant cover provided by a policy you already have in place.

That said, the current crisis could serve as a reminder for some of us to think about how we could protect ourselves from loss of income further down the track.

Generally there are two main options: redundancy insurance and income protection. While redundancy insurance is designed specifically to cover individuals who lose their job due to an involuntary redundancy, income protection typically provides cover if you can’t work due to illness or injury. Some income protection policies allow customers to add a level of cover for involuntary redundancies. Consider checking with your insurer whether that’s an option and what additional premium costs, exclusions, no-claim and waiting periods, and other limits and conditions might apply, such as ‘pandemic’ exclusions. (It’s important to note that some insurers may have changed conditions of their policies due to COVID-19.)

If you already have cover in place, could you reduce your costs by shopping around for a cheaper policy?

Compare direct income protection policies

If you’re comparing direct income protection policies, the comparison table below displays some of the policies currently available on Canstar’s database for a 20-29 year old non-smoking male working in accountancy as a degree-qualified accountant or CPA. Please note the table is sorted by Star Rating (highest to lowest) followed by provider name (alphabetical) and features links direct to the provider’s website. Use Canstar’s income protection comparison selector to view a wider range of policies.

7. Health insurance: Could a policy checkup help you save?

Private health insurance can be a big ongoing expense for households. But for savvy consumers, here are some ideas that may help you cut your costs:

  • Pay by direct debit – some providers offer a discount if you pay automatically from a bank account
  • Pre-pay your premiums – some insurers may charge you less if you pay upfront for an entire year’s premium when you take out your policy or when it comes time to renew
  • Compare your options – could you save by shopping around? To give you an idea of the potential savings, at the time of writing, there is a $216 difference in monthly premiums between the cheapest and most expensive Silver tier hospital and extras policies in Canstar’s comparison tables, based on a couple in their early 30s in NSW with no pregnancy cover.

Compare health insurance policies

8. Family first: What about life insurance?

When reviewing your finances, as well as looking for potential savings, it could also be worth thinking about some of the ‘what ifs’. Like what if the very worst were to happen? Life insurance is designed to help your family cope with expenses if you pass away or are diagnosed with a terminal illness. While some policies could now exclude certain coronavirus-related claims, such as for recent travellers looking to obtain a new policy, it could be something you might like to consider to help with future events.

Compare direct life insurance policies

If you’re comparing life insurance policies, the comparison table below displays some of the policies currently available on Canstar’s database for a 30-39 year old non-smoking male working in a professional occupation. Please note the table is sorted by Star Rating (highest to lowest) followed by provider name (alphabetical) and features links direct to the providers’ websites. Use Canstar’s life insurance comparison selector to view a wider range of policies.

9. Investment options: Should you consider buying or selling shares?

The Australian sharemarket has been on a rollercoaster ride since January. Given the stock market has historically recovered over time following crashes, some are asking themselves if now is the time to buy in at a discount in the hope of chasing some longer-term gains. Others, concerned that the drops in value could continue, are cutting their losses and selling. Which is the right option for you? The answer really comes down to your current circumstances (such as whether you need access to cash in the near future), as well as your risk appetite.

Compare online share trading accounts

10. Home help: Can you cut the costs of energy, internet and phone bills?

According to Canstar Blue data from 2019, the average Australian household spends $77 on its monthly internet (NBN) bill, $80 on the monthly phone bill for a phone-on-a-plan option, and around $422 per quarter on energy bills. Over a year, these can be significant expenses.

If you’re looking to trim some of your household costs, now could be a good time to see if you can beat the averages by moving to cheaper tariffs.

Additional reporting by Sean Callery

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As with all our content, Canstar’s Coronavirus coverage will always be free for our readers.


About the authors:

Sean Callery

Sean Callery is Finance Editor at Canstar. His team covers just about every finance topic under the sun, but mainly superannuation, banking and insurance. He’s passionate about financial literacy and translating finance-ese into simple language that anyone can understand. Armed with a Bachelors Degree in Journalism and a Masters Degree in Creative Advertising , Sean has accumulated more than a decade of experience in communications roles in Australia, the UK and Ireland – across finance, banking, consumer and legal affairs, and more. Before joining Canstar, he was responsible for content at one of Australia’s biggest member-owned financial institutions. Outside of the day job, Sean loves reading, running, listening to podcasts, and his dog – he particularly loves his dog.

 

Amanda Horswill

Amanda Horswill is a Senior Finance Journalist at Canstar. A journalist for more than two decades, Amanda Horswill has covered a gamut of subjects, including property, lifestyle, hyper-local news, data journalism, the Arts and careers. She’s served as the Editor of Brisbane News, Deputy Features Editor for The Sunday Mail, Deputy Editor – Digital at Quest Community News, and a host of other senior positions at News Corp, prior to joining Australia’s biggest financial comparison website, Canstar. Amanda is fascinated with the ever-changing world of finance. A passionate believer in the motto “knowledge is power”, she strives to translate the news into practical information that will help readers make informed decisions about their future. When not analysing the latest economic news, Amanda can be found pouring over local property listings, searching for her next renovation project. Follow her on Twitter and LinkedIn


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