Helpful hints

Helpful Hints


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Affinity Credit Card:A credit card that links up with a particular organisation, charity or cause. The cardholder receives benefits such as discounts or promotional rewards for specific transaction activities .
Age Requirement:To apply for a credit facility you must be at least 18 years old.
Annual Fee:Some credit card issuers charge an annual fee; it is the yearly cost you pay for having the card.
Annual Percentage Rate (APR):The annual percentage rate is a measure of the cost of credit expressed as a yearly interest rate.
Application:A form used to apply for credit.
Asset:Cash or anything you own that can be turned into cash. This includes property, goods, savings or investments.
ATM:Automated Teller Machine.
Available Credit:Available credit is your credit limit minus the total of your current balance and any transactions you have made that have not been applied to your account. It is the unused portion of your credit line.
Average Daily Balance:The average daily balance is a common way credit card issuers and other lenders calculate the amount upon which the finance charges will be calculated. The credit card company finds the balance each day of the billing period, adds the daily balances together and divides by the number of days in the period. The calculation includes new purchases and payments. You should refer to the conditions of use of your credit facility for specific information and details regarding the calculation of the Average Daily Balance.
Bad Credit:A term used to describe a poor credit rating. Common practices which can damage your credit rating include late or missed payments, exceeding the credit limit on cards, defaulting on loans or declaring bankruptcy. ‘Bad Credit’ can result in the denial of future credit or having to pay a higher interest rate.
Balance Calculation Method:Balance Calculation Method is the method used by a lender to calculate the balance owed and the interest due each month.
Balance Transfer:Transferring balances from one credit card to another, usually to take advantage of a lower interest rate. Transfers are limited to the available credit on the receiving card.
Balance/Amount Owed:The total amount you owe the lender including any unpaid balance from last month, new purchases, cash advances, and any other charges such as an annual fee, late fees or finance charges. The "Amount I Owe" should not be confused with the minimum amount due (the minimum payment required each month).
Bankruptcy:Bankruptcy is a legal declaration of your inability to repay your debts. Bankruptcy should be viewed as a last resort. It will tarnish your credit rating and will remain on your credit report for up to seven years, severely impacting your ability to obtain credit in the future.
Billing Cycle:The number of days between your last statement date and your next statement date.
Billing Statement:A monthly bill from your lender which describes and summarises the activity on your account including the outstanding balance, purchases, payments, credits, finance charges and other transactions for the month. In some circumstances, these may be sent less frequently.
Borrower:The borrower is the person who signs and agrees to the terms of credit, and who is legally responsible for repaying the loan.
Bottom Line:The bottom line is your monthly income less expenses.
Budget:The financial record you use to keep track of the money you earn, how much you spend and what you spend it on. Your budget also includes savings and how much you pay to your lenders.
Cash Advance Fee:A one-time fee for cash advances in addition to normal finance charges. This fee may be a percentage of the advance amount, a flat fee or a combination of the two
Cash Advance:A cash withdrawal using your credit card at an automated teller machine or bank teller. This cash is an instant loan from your credit card account. The credit card issuer will apply finance charges from the day you take the advance until the day you pay it off. A transaction fee may also be charged based on the amount of your withdrawal. Cash Advances may also include ‘cash like’ purchases such as travelers cheques.
Cash Rate:The Cash Rate is the interest rate that major banks charge to many of their best corporate borrowers. Each bank sets it own Cash Rate, though because the rate is so competitive, most of the time the rate is similar amongst all banks.
Charge Card:A card that requires full payment of the balance upon receipt of the monthly statement. If payment is made on time, there are no finance charges.
Collateral:An asset – also known as ‘security’, pledged to a lender to reduce the risk of a loan. Collateral usually refers to real estate, motor vehicles, caravans or cash like deposits. Collateral is not required for unsecured credit facilities.
Collection:The business area within a credit provider that is set up to call and remind customers that their accounts are past due and the referral of a past due account to a specialist in collecting loans or accounts receivable.
Consolidation Loan:If you owe money to several credit providers, you can combine your payments and balances into a single account with one credit provider. This can be done in several ways. For example, you can transfer several high interest credit card balances onto one card with a lower rate. Or, if you own a home, you can consolidate your debt into a low-interest home equity loan.
Consumer Credit / Credit Counselling Services:Non-profit organisations with professional financial counselors who provide help to people during financial crises by negotiating with their credit providers to accept reduced payments. This assistance is available free or at a very low cost.
Credit Bureau File:A credit bureau file is a record of all of the information that credit bureaus have collected about the way you've managed your finances over the last five to seven years. It is the official record of the names of companies you have applied for credit with, those that have lent you money and whether you have missed any payments. The information on your report may become a factor contributing to a decision whether you qualify or not for credit cards, mortgages, loans or connection to utilities like the telephone.
Credit Bureau:A credit bureau is a company that maintains credit files. Potential creditors generally check your credit bureau file when you apply for a loan, credit card or even to get the phone connected. The credit bureau also records cases of default in your obligations to lenders or credit providers. If you are denied credit, the creditor must tell you where they got the credit information.
Credit card contract:The credit issuer’s written statement of terms and conditions relating to your credit card account. The Credit Card Contract is required by law. The Contract states many things including how interest is calculated, how you can pay off your card balance and your rights in any billing disputes.
Credit Card Debt:The total unpaid balances on all of your credit cards (not to be confused with the minimum amount you owe each month).
Credit Criteria:Factors used by credit providers to rate the credit worthiness or ability to repay debt. They may include the following: income, amount of personal debt carried, number of accounts from other credit sources and credit history.
Credit History:Your credit history is a record of the way you manage your debt. It is kept by credit bureaus in the form of a credit bureau file. Banks and credit card issuers tell the credit bureau details of all applications for credit and if you have defaulted on any obligations. When you apply for new credit or a loan, the credit provider will check your credit history before granting any credit. Information such as missed or late payments will be on your credit report for up to five years and bankruptcy filings can remain there for as long as seven years.
Credit Limit:The maximum balance you can carry on your credit card or line of credit account.
Credit Management:The way you handle the money you borrow from banks or credit providers. For example, you should try to pay more than the minimum due each month and make sure payments are received by the due date.
Credit:An amount of money that a lender provides to you. For credit cards and lines of credit, you can charge/spend any amount from your credit limit to make purchases or take cash advances. As long as you pay the minimum amount due each month by the due date, you can continue to use your remaining available credit. For fixed loans, the credit is the amount lent upon opening of the account.
Credit-worthy:You are judged to be qualified to have credit provided to you.
Daily Interest Rate:The interest rate factor used to calculate the interest charges on a daily basis. The factor is computed by dividing the yearly rate by 365 days.
Debit Card:When you make a purchase with a debit card, your money is deducted directly from your financial institutions account. You can spend only the amount of money you have in your account when you use your debit card.
Debt Ratio:Debt ratio is a way of expressing how much of what you earn is committed to paying your debt each month.
Debt:Money you owe to banks or credit providers. More specifically, it is the amount of money that you have borrowed and not paid back.
Default:Failure to repay a loan according to the agreed upon terms.
Deferred Payment:Payments put off to a future date or extended over a period of time. Interest will usually still accumulate during deferment.
Dispute:If you think that an item shown on your statement is wrong, you must contact the credit card issuer immediately. In some cases the issuer may be able to correct the error immediately however usually you will be required to lodge a dispute claim in writing. You must not delay this process as the card issuer’s ability to get a refund of the charge/s and/or credit your account can have set time limits.
Due Date:The day a payment is due to a credit provider. After that date, a late fee can be charged, the payment can be recorded as late, and the account can be considered in default. If you are unable to make payment close to the due date, you should contact the credit provider and let them know.
Expense Ratio:Expense ratio usually gives a clear picture of your overall financial well-being. To calculate your ratio, first add up all your monthly income including take-home pay (after taxes), Centrelink benefits and maintenance. Then add up all your monthly payments for interest bearing loans and accounts, such as mortgages, personal loans, credit cards and car loans. If you rent your home, include that amount, but do not include utilities and telephone charges because they can vary on a monthly basis. Finally, divide your monthly payments by your income. Multiply the result by 100 and that number is your expense ratio percentage.

A low ratio is under 20%, which means that you are in good financial health and are doing a good job of managing your money.

A moderate ratio is between 21% and 40%. This means that you should look carefully at your monthly payments and start decreasing your overall level of debt, including credit cards.

A high debt burden is over 40%. You should immediately stop accumulating debt and start looking for ways to decrease your debt or increase your income.

Finance Charges:Finance charges are the cost of consumer credit expressed as a dollar amount. They include any charges, such as interest and fees, paid by the consumer to the credit provider for obtaining a loan.
Finance Company:A finance company is a business that makes consumer loans, often to consumers who cannot qualify for credit at a credit union or bank. Typically the interest rates charged by a finance company are higher than those charged by other credit providers.
Financial Health (also referred to as financial well-being):This is a description of your overall financial situation. To take a closer look at your financial health, you consider the amount of money you make each month, if you own a home or other valuables, any investments you may have, and the amount of debt you carry. For example, if you own a home, have a small mortgage, and have very little credit card debt, you are in good financial health.
Fixed Expenses:Fixed expenses are those that you have to pay every month. These are expenses that you really can't change like your mortgage, rent payment or car payment.
Forbearance:Forbearance is a word used to describe the situation in which a credit provider will postpone payments, say for six months to one year, due to hardship. Interest continually accrues during the period of forbearance.
Guarantee:An agreement that is made with a credit provider that makes the Guarantor also legally responsible for the payments, penalties and implications of the principal borrower in a loan.
Guarantor:A guarantor is a person who signs a loan or credit card, pledging to also be legally responsible for repaying the loan or debt in the event the borrower is unable.
Household Income:Income from all sources including wages, commissions, bonuses, child support, Social Security/pension benefits, unemployment compensation or disability, dividends and interest.
Instalment Loan/Personal Loan:A loan that you promise to pay back by paying the same amount of money on a regular basis, usually monthly, for a specific amount of time. For example, you might pay back an instalment loan by paying $300 a month for five years. Personal and car loans are usually installment loans.
Interest Rate:The rate that a bank or credit provider charges for the money it lends to you.
Interest-free Period:Some credit cards give the cardholder the option to make transactions on their account without being charged any interest. If your card has an ‘interest free day’ clause (check your pre contractual statement or your conditions of use) then you will qualify for interest free use so long as you pay the entire closing balance of each monthly statement before the due date shown on the statement. If you pay less than the full closing balance as shown on the statement you will incur interest charges in accord with the conditions of use. If you short pay one time, you usually need to pay the full balance for two consecutive months before your account will be interest free again.

If you carry a balance on your credit card from month to month, you do not have an interest-free period even if your conditions of use say your account has interest free days options. You are charged interest immediately when you make a purchase. For example, if you have a balance of $500 and make a payment of $50 on June 1st, and buy an item for $50 on June 2nd, you will immediately be charged interest on that $50 purchase. This is because you have an outstanding balance of approximately $450 between June 2nd and your next statement.

Importantly, if your credit card is not an interest free day type account, even if you pay the statement balance in full each month, you will still be charged interest.

Late Payment Fee:A fee charged for failing to submit the minimum monthly payment by its due date. Refer to your conditions of use for details.
Late Payment:All finance agreements have a date by which payments are due. If you miss the due date, the account is considered overdue and you may be charged a late fee. Late payments may be reflected on your credit report. If you have paid late numerous times, it may be difficult to get future credit.
Legal Judgment:A court verdict that requires a person to do something, such as pay a debt.
Liability:Liability is the responsibility for a loan or credit account. When applying for a credit card, for example, the card holder agrees to be liable for any charges to his or her account, including purchases, fees and finance charges. Your liability is described in the Credit Card contract you receive from the issuer.
Minimum Amount Due/Minimum Payment:The smallest amount you can pay by the due date and still meet the terms of your Credit Contract.
Outstanding Balance:The total amount that you owe on a credit card or other debt.
Over -Limit Fee:A charge imposed for exceeding your assigned credit limit.
Over the Credit Limit:When the amount you owe is more than the limit on your credit card. Any combination of purchases, cash advances, fees or finance charges may cause you to exceed your credit limit. For example, you will be over the credit limit if you spend $2,000 when you have $1,000 of your credit limit left. If you go over your credit limit, you may be charged an extra late payment fee possible on a regular basis until the amount of money you owe is less than or equal to your credit limit.
Overdue:The status of an account when the minimum payment has not been received by the due date.
PIN:Abbreviation for Personal Identification Number - the number used as an access code in electronic devices. PIN security is critical so please refer to instructions issued by your card issuer and follow them strictly. Failure to take care of your PIN may cause you financial loss.
Posting Date:The date that a purchase, cash advance, fee, service charge or payment is recorded on your charge or credit account. This is also the date shown on your statement.
Prepayment:When a portion or the entire amount of the principal of a loan is paid before it is due. This will usually reduce the total amount of interest that must be paid. In some cases (particularly with mortgages) there may be fees for prepayment so check you conditions of use.
Previous Balance:The total balance due at the end of the previous billing cycle.
Principal:Principal is the portion of a loan that represents the actual amount of money borrowed. Principal is separate from interest. In terms of credit cards, principal represents the price of purchased items or the amount of a cash advance.
Reference/ Referee:A person who can vouch for your reliability, employment history or other factor needed to determine your creditworthiness or who may be contacted in case you cannot be contacted.
Reserve Bank of Australia:The central, government bank in Australia, that monitors and influences the total supply of money and credit. The Commonwealth Treasury sets interest rates, maintains the flow of cash to local and regional banks and helps guarantee the stability and security of the Australian banking system.
Revolving Credit:A credit agreement that establishes a credit limit and allows consumers make various credit and debit transactions without the need to get specific credit approval.
Reward Scheme/Loyalty Program:Some credit card issuers supply benefits based upon the card's usage. Benefits are usually in the form of services, such as access to airline flights, discounts on future purchases or cash refunds. A fee is often charged to be part of a reward scheme.
Secured Debt:Debt for which repayment is guaranteed through the provision of security, or collateral, of equal or greater value than the amount of the loan. If you do not repay the loan, the credit provider may take possession of the security. Collateral may be an asset such as a car or a home. For example, a mortgage is a secured debt in which the home is security. If the person fails to repay the loan, the credit provider may take the home as payment.
Signs of Trouble:Situations or events that suggest you may be having financial difficulty. For example, a sign of trouble could be that you use your credit card to pay for groceries because you have no money in your everyday savings account. Other signs of trouble include paying only the minimum due on your credit cards, using one credit card to pay the monthly minimum on another card and routinely having "maxed out" credit cards.
Taxable Income:Any money you earn or receive - such as salary, bonuses or interest from investments that can be taxed by the government.
Transaction Date:The date a purchase is made, cash is withdrawn or a payment made on your account.
Transaction Fee/ Usage Fee:An fee charged for various activities such as using an ATM or receiving a cash advance.
Uniform Consumer Credit Code:The Uniform Consumer Credit Code covers almost all the consumer credit transactions that take place across Australia including personal loans, credit cards, overdrafts, home loans and pay day loans. It doesn’t cover all forms of credit. For example, some types of short term credit, or credit used for investments or business purposes are excluded.
Unsecured Debt:This is debt that is not guaranteed by security, therefore, no assets are committed in the event of default. If the credit issuer is unable to collect on the loan, its value is lost. Most credit cards are unsecured. The rate of interest on unsecured credit may be higher than for secured credit.
Variable Expenses:Variable expenses are those that can change from month to month. Variable expenses include necessities that can be reduced (such as food) and non-essentials that could be eliminated (e.g., dining out at restaurants). Reducing these expenses is the simplest step in getting control of your finances.
Variable Interest Rate:An interest rate that changes. The change may be based on specific events such as the Cash Rate. A variable rate credit card will often have an interest rate like "Cash + 5.9%" meaning that the interest on the card is the Cash Rate plus an additional 5.9%.
Zero Balance:Zero balance is when the total outstanding balance is paid and there are no new charges or cash advances during a billing cycle.

Budget builder

Good money management involves you having control over your money - not the other way around! And budgeting plays a key role in that process. Even careful spenders can find themselves sliding into debt - sometimes due to unforeseen circumstances, like the loss of a job. Often though, people find themselves in financial hot water simply because they are spending more money than they earn.

The best way to prevent - and deal with, credit problems, is to develop good money habits. Budgeting encourages us to do just that. It is the only way you will know both where your money goes each pay period, and where you can cut back.

There are many tools available to help you develop and manage your budget. Here are some tools available for free online:

Who can help?

If you find yourself struggling financially, remember you are not alone. There are many free or inexpensive organisations that can help – and which have experience negotiating with credit providers. Plenty of other people have faced challenging financial situations, and by taking steps to better manage their money and credit, they have improved their position. You can too.

Sometimes it is better to acknowledge you need help, than to struggle for years.

The Financial Counsellors’ Association can provide a list of contacts in each state, and the following organisations can also help:

QLD - Credit and Debt Hotline – 1800 808 488

ACT - Care Financial Counselling Service 02 6257 1788

NSW – Credit and Debt Hotline 1800 808 488

VIC - Financial and Consumer Rights Council 03 9663 2000

WA - Consumer Credit Legal Service 08 9221 7066

SA - Community Legal Service 08 8362 1199

TAS - Roma Mitchel Community Legal Centre Inc. (03) 6234 3510

NT – Anglicare Top End Financial Counselling Service 08 8985 0000

Useful links - for information on the latest credit rates, fees and charges from a variety of lenders. – for a ‘star rating’ of a cross-section of credit products. – the Australian Consumers’ Association website. – the Australian Bankers Association website. – the Australian Securities and Investments Commission website. – for information on getting a copy of your credit bureau file. – for information on bankruptcy and its alternatives. – to see what government entitlements you may be eligible for. – for more on the Uniform Consumer Credit Code.