Visit FIDO, ASIC’s website for consumers and investors for financial tips
and safety checks, www.fido.gov.au
Friday 10 November 2006 LAWFUEL – Legal News, Legal Jobs Network – As Christmas approaches, the Australian Securities and Investments Commission (ASIC) is urging consumers to keep one eye on their wallet while they enjoy the festive season. ‘While this is traditionally a time for letting your hair down, it’s important not to let your financial know-how take a holiday, or you may be left feeling high and dry come January’, ASIC’s Deputy Executive Director of Consumer Protection, Ms Delia Rickard said. ASIC has issued some money tips to help consumers avoid a nasty financial hangover in the new year. Smart saving – plan ahead for Christmas expenses Christmas is traditionally a time for fun and festivity. However, it can be a stressful time financially for many people, with pressure to find extra cash for presents, entertainment and holidays, on top of regular expenses. ‘It’s all too easy to get caught up in the spirit of the season and indulge in some impulse spending while doing your Christmas shopping’, Ms Rickard said. ‘Try to work out what your additional expenses are likely to be ahead of time and set yourself a budget based on what you can afford to spend. Even now, it’s not too late to start putting a little bit of money away to cover these costs and if you have planned your budget in advance you’ll find it easier to stick to’, Ms Rickard said. Smart spending – avoid credit if you can Consider using alternatives to credit such as cash, EFTPOS or debit cards and lay-by. Recent figures show that Australians currently owe over $37 billion on credit and charge cards∗, despite the fact that this is one of the most expensive ways to borrow money. Even if you spend just $1,000 on credit, this debt could take you over 11 years to pay off and cost about $860 in interest.∗∗ ‘As an alternative, many stores offer lay-by facilities which allow you to make regular, manageable payments for items often at no cost, or for a small additional fee.’ ∗ Credit and Charge Card Statistics, Reserve Bank of Australia, August 2006. ∗∗ Assuming a minimum payment of 2.5%, an annual interest rate of 16 per cent and assuming you stop using the card.
‘Lay-by is a really smart way to do your Christmas shopping. It allows you to pay only what you can afford, and avoid getting into debt along the way. You can leave presents from Santa safe and secret in the store until you pay them off, and the warranty doesn’t start until you take them home’, Ms Rickard said. Smart investing – watch out for holiday scams ‘Frauds and scams can be very common at this time of year. Some people have extra cash in hand as a result of Christmas bonuses or gifts and also have extra time over the holiday season to contemplate advertisements or offers they wouldn’t usually look twice at’, Ms Rickard said. ‘Deal only with licensed Australian Financial Services businesses when you are getting financial advice, or buying financial products, and be vigilant about any offers or opportunities that sound too good to be true – they are probably lies’, Ms Rickard said. ASIC’s consumer website, FIDO at www.fido.gov.au, offers more information and advice on a range of financial topics including tips on budgeting, credit and avoiding scams or illegal schemes. Your Money, ASIC’s practical guide to making the most of your money, is also available on FIDO, or contact ASIC’s Infoline on 1300 300 630 to request a copy. For further information contact: Delia Rickard Deputy Executive Director, Consumer Protection Telephone: 02 6250 3801 Mobile: 0412 673 026 Danielle Huck ASIC Media Unit Telephone: 03 9280 3407 Mobile: 0417 540 769 Page 2 of 2