accountants
News & Events » An idea to save you thousands
The Reserve Bank of Australia has removed almost all of the mystery about what is going to happen with interest rates. Rates have bottomed out and are likely to start going up. Announcements from the RBA Board state that the “stronger-than-expected economic data and the general improvement in sentiment both in Australia and abroad have reduced the likelihood that a further reduction will be required.”
Most banks have already factored in the likelihood of a rate increase so it’s possible you are already paying more for your cash.
Typically, we take on debt at different times and it is often linked to a major purchasing decision or event. As a result, it is not uncommon to be carrying multiple debt commitments. If you take a moment to have a look at your various debts you are likely to find that they are quite different from each other. Interest rates, the life of the loan, whether you are repaying the principal of the loan or only the interest costs, the ability to accelerate repayments – all of these may be different and the difference may not be to your advantage.
Much of the focus at the moment is on official cash rates. But what about the rates for other forms of debt? Investment loans can be 7-8%, overdraft rates 10-12% and credit card debt 16-18% with store debt sometimes 20% plus. When you utilise these forms of debt you may find that your cost of borrowings escalates quickly. If you have a mix of business and personal debt then chances are that most of your business debt is charged in the 8-12% range. Put into perspective, for every $100,000 of borrowing you have, you may be paying up to $6,000 per annum more than you need to.
We’ve mentioned this before but it is something few of us actually get around to doing anything about: If you have not had a banking review done for some time, now is the time to do it. It might save you thousands.
Contact your Saige adviser today who will put you in touch with specialists who can work with you to reduce the cost of your cash, while they ensure that any change takes into account your business and taxation needs.