It’s new financial year’s eve and there are plenty of reasons to pop the champagne at midnight. A bunch of changes that take place as of tomorrow means good news for consumers.
Anyone who holds a credit card or who applies to get a new one will be better protected by changes to credit laws. For holders of existing cards, credit card providers will no longer be able to send you offers to automatically increase your credit card limit (unless you have already given them the thumbs up to send them to you). You will start to see changes to your monthly statements too, including information to show how long it would take to pay off your balance if you only make the minimum payment (I guarantee this will shock the hell out of you), and for holders of cards with an interest free period, info explaining how your interest free period works.
People applying for a new credit card have the added protection of choosing their credit limit rather than just having to accept the one the lender sets. Fees for going over this limit will be banned on new cards and they’ll now have to tell you when you have hit your limit. And if you have a balance attracting different interest rates (highest rate for cash withdrawals, lower rate for purchases and possibly a zero rate for balance transfers) the new laws will mean that your repayments will go towards paying off the highest interest rate components first. Makes total sense for consumers but I reckon the banks will either be spewing about these changes or will just claw back lost profits through other means.
If your bank tries to screw you too much, you can now switch transaction accounts to another provider by filling out a single form. It’s now up to the financial institutions to swap over all those direct credit and direct debits you have set up, rather than the onus being on individuals to ensure it’s all sorted to avoid problems with bills and wages not being paid.
There are laws starting in the new financial year to tighten up the financial planning industry, although they come with a crazy 12 month period where planners can continue to ride the gravy train of commissions on investments they recommend to new clients. If you are looking for advice, the first question to ask a planner is “Have you implemented the new laws?” If they balk on that one, take your business elsewhere.
Tax rates change tomorrow to see a tripling of the tax free threshold from $6,000 to $18,200 – a big win for low income earners. The 30% tax rate goes up to 32.5%, but the tax free threshold rising so much means people in this bracket will actually be better off. And, of course, the much debated carbon tax starts. I reckon there will be less impact from this than there was from the GST when it was introduced 12 years ago. Time will tell.
So lots to think about as you do the countdown and sing Auld Lang Syne. Or not.