Skip the small change

small-change
Small change (got rained on)

A week ago a patient teller at our local bank dealt with one of my occasional visits to deposit a bag of small change. Yes, I raided the piggy-bank again, and in case you don’t believe me, there it is (left), handed out free by Macquarie Goodman at the grand opening of the Metroplex on Gateway industrial estate at Murarrie in 1998.

Once I had a Bundaberg rum bottle filled to the lip with one cent coins. The label was signed by WA blues musician Matt Taylor, after Taylor’s band Chain performed at a venue managed by me and a team of volunteers. Matt signed “To (as yet-un-named son) – you ain’t even born yet.”

Later, when we were moving house, the rum bottle was accidently kicked over, smashing on the terracotta tiles, spilling 789 one cent coins across the floor. By this time the Reserve Bank had scrapped one cent coins and was working on ridding the country of two cent coins as well. The Royal Australian Mint removed one and two cent coins from circulation in 1991-1992. The Reserve Bank decided in 1990 that 1c and 2c coins had to go as inflation had rendered them worthless. Or to be more precise, the cost of minting them far outweighed their face value.

The Royal Australian Mint, however, has produced mint sets of one and two-cent coins for collectors in 1991, 2006 and 2010. I was surprised to read that one can still present one and two cent coins as legal tender and they can be banked. They can also be sold as collectables.

Trivia alert: Some of the small change was melted down to make the bronze medals presented to athletes at the 2000 Sydney Olympics.

Other countries abandoned their one and two cent coins around the same time, citing inflation and the increasing cost of bronze (an alloy of copper with minor amounts of tin and zinc). Ireland ditched its small coins last year, in line with six other Eurozone countries

The end result of axing 1c and 2c coins is a process called ‘rounding’ which means if something is priced at $1.98, you pay $2. If it costs $1.93, you pay $1.95. Who knows what the rounders will do when they scrap the five cent coin – and trust me – it is not far away.

One of the main arguments for doing away with five cent coins is the increasing use of pay wave for small transactions.

What can you buy with five cents anyway? The Northern Star newspaper based out of Lismore asked its readers just that. The answers included ‘lollies at some shops’, ‘20 five cent coins from the tooth fairy’, ‘lemons or limes at the fruit stall’ and my personal favourite – ‘the best things ever to scratch a scratchie’.

In 2014, a Senate Estimates Committee hearing was told the five cent coin cost 6c to manufacture (it’s now closer to 7c). The cost is partly due to the combination of copper and nickel, but also the labour involved in handling and distribution. Yet the 5c coin, with an echidna on one side and Queen Elizabeth on the other, it is still with us, weighing down pockets and purses, wearing holes in the lining of jackets and trousers, disappearing down the sides of sofas and car seats.

One way you can find creative uses for those pesky five cent coins is to donate them to charity. Agencies have been hoarding 1c and 2c coins for years, using the money collected for people in third-world countries. For the past 25 years they have been focusing on 5c coins.

The Sydney Morning Herald reported last December that Australian charity Y-GAP, Y-Generation Against Poverty organised a fundraising campaign which collected 10.9 million individual 5 cent coins.

Then there’s those foreign coins one inevitably brings home from abroad. My cache of foreign shrapnel includes $5.90 in New Zealand coins, a Kiwi $5 note and a one euro coin. If you’ve noticed, some airlines encourage you to deposit foreign coins in an envelope and leave it in the seat pocket of the aircraft as you disembark. Several charities collect these coins and use the proceeds for impoverished children. UNICEF, assisted by the Commonwealth Bank and BankWest, has amassed more than $260,000 in small change since 2009. Small amounts of First World cash go a long way in Africa or India. One UK penny will provide a child with clean drinking water for a day; two Canadian dollars (Loonies) can provide a malnourished child with enough therapeutic super food for one day; in India, 220 rupees (about $4) can buy someone a mosquito net.

The subject of money was being raised at one end of a long table in the local pub on Sunday where members of our community choir had adjourned after a performance. I was at one end of the table and two of the women at the other end were talking about the design of the new $5 note. I set my hearing aids to ‘noisy room’ but still their lips moved and no words came out.

“I’m sure it will make an excellent FOMM,” I shouted, “Once I figure out what you are talking about.”

It transpired they were adding to the dissent and disappointment over the design of the new $5 note. The anti-royalists jumped on to social media posting hastily photo-shopped memes. There are many versions of the $5 polymer note where the Queen’s image has been variously replaced with Tony Abbott eating an onion, Tony Abbott wearing cyclist’s sunnies, Dame Edna looking dashing, Kathy Freeman looking like an Olympic legend and a few odd ones like Pluck-a-Duck, Shane Warne, Delta Goodrem and a jar of Vegemite.

Why did we need a new $5 note at all, you might ask? This one has enhanced security, we’re told.

We have an international track record for that, did you know? Australia was the first country to produce polymer banknotes (in 1988), largely as a response to an increase in counterfeiting. Prior to the launch of polymer notes (created by the CSIRO, the Reserve Bank and Melbourne University), a group of enterprising lads from Melbourne made pretty good copies of the (paper) $10 note. The forgeries were so good some were still in circulation when polymer notes were first introduced.

The new $5 note has a clear plastic strip down the middle, apparently un-forgeable. It also has tactile features to help the vision impaired differentiate between a fifty and a five. The new note is the first of five denominations to be rolled out by Reserve Bank of Australia (at a total cost of $29 million) over the next few years.

Curious, I went to the bank yesterday, ready to trade 100 five cent coins for one of the new notes. Alas, our local teller said she had not spied one in our town and the local supermarket told me the same story. Apparently there’s still 34 million $5 notes in circulation. You will be relieved to know that I have extracted the only necessary fact from this Reserve Bank of Australia technical article about the life-cycle of banknotes: the median life of a $5 note is 2-3 years.

Good luck finding a new one, then.

 

 

Deeper in debt

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Freeimages.com/Johanna Llungblom

You’d think that after 42 years’ experience handling credit cards Australians would have wised up to over-using their high interest card/s and getting into debt.

Research by comparison website finder.com.au shows that Aussies are up to their eyebrows in credit card debt.

Finder’s analysis of Reserve Bank of Australia data shows that we have $18 billion more credit card debt than we did a decade ago and we have 16.3 million credit card accounts – equivalent to 90% of the adult population.

Bessie Hassan, finder.com.au’s Consumer Advocate, says Australians amassed $32 billion in credit card debt by December 31, 2015. Crikey, that makes my $188 balance payable by March 31 look kind of paltry.

Notwithstanding, one of my better later-life decisions was to keep my credit card with its modest limit, as it allows me to pay for concert tickets, annual subscriptions, overseas airfares and travel and thus defer payments to hopefully co-ordinate with monthly pay days.   But even at that rate, it is alarming how quickly one comes to owe $1,450 and there’s only $1,369 in the bank account.  And as we all know, if you don’t pay the balance off by the due date, you incur interest as high as 23%. I’m aware that folks who are living beyond their means commonly go card-shopping and pay off one balance by incurring a debt on the second card.

Enter Bankcard, 1974

The great expansion in borrowing goes back to 1974 with the introduction of Bankcard; long before many of you who are having panic attacks right now were even born. Bankcard was the first credit card, but within 18 months it was broadly accepted, with 1.054 million users and 49,000 merchants on board.

Of course my parents’ generation were aghast, they of the ‘never a borrower or a lender be’ class. They saved up for stuff, or put it on lay-by. What – you’ve never heard of lay-by? Let’s say you are in (leading department store), when a fabulous crystal chandelier catches your eye.

You go to the lay-by counter and enter into what the ACCC defines as an agreement to pay for the goods in at least two instalments. You do not receive the goods until the full price has been paid.

The beauty of lay-by is that you get a cooling off period, so if you get home and show the wife pictures of the fabulous chandelier on your IPhone and she spits the dummy, you can cancel the lay-by agreement and the business will refund your deposit and all other amounts (except for the termination fee).

The Australian Payments Clearing Association (APCA) has an intriguing timeline which shows the development of finance and credit in this country. Notable is the emergence of international credit cards in the 1980s (visa, MasterCard) which ushered in a new era of competition. Along with nifty initiatives like awarding frequent flyer points on credit card use, rival credit card providers enticed people away with tempting (introductory) low or no-interest periods. In those days hardly anyone charged annual fees, so some people used their cards to buy groceries.

Hassan says the data shows that 90% of people aged 18 and over have one credit card (on average), an increase of 79% from 2004. In warning that the market appears to be reaching saturation level, Hassan says that while a credit card is a convenient, short-term way to borrow money, you can quickly reach dangerous levels of debt.

Someone is spending my share

Total balances on credit cards hit $52 billion at December 31. The total balance per card is currently $3,192, $1,971 of which is accruing interest.”

There are a range of comparison websites like where you can find a snapshot of credit card provider terms. Consider this a moving target, but a quick perusal of Infochoice showed interest charges ranging from 10.99% to 23.50%. Most providers charge an annual fee ranging from $30 to $399. Virtually all offer an interest-free period of 55 days.

Taking the Extreme case, if your $20,000 limit card is ‘maxed out’ and you are paying 15% interest and an annual fee of $165 (due tomorrow), and you’ve just lost your job, it could be time to sit down with your credit card provider and come to an arrangement.

“Look, I can give you $10 a week, every week. Or I can declare myself bankrupt. Your choice.”

There’s a fair chance after a year or so Mr Extreme’s circumstances will have improved and he can afford to pay back the minimum on a debt which over a year has become much larger, but he’s not bankrupt.  He may even have sought advice from a personal finance counsellor.

Bessie Hassan lists a few things credit card users can do if they think their card usage is getting out of control:

  • Don’t get into the trap of using it as a cash advance when income runs low;
  • Don’t accept a higher credit limit just because a lender offers it to you;
  • Clean up your credit card accounts by paying more than the minimum monthly payment, reducing credit limits and practise responsible spending;
  • Transfer all your debt to a new provider (one offering 0% interest for a limited time) and only pay interest on new card purchases.

Changes to consumer credit laws in March 2014 means it does not take much to get a black mark on your credit rating. Before, it would take a string of missed payments before a default notice appeared on your credit report. Now, a payment missed by 14 days can trigger a default. As anyone who’s been oversea on holidays and thought the payment could wait now realises, it can’t wait.

According to the Australian Retail Credit Association, 59% of Australian consumers do not know credit reporting works and are not aware of these changes.

But what about the third-world?

Ah, but this what we middle-class Aussies call a “first-world problem”. Time for a seemingly unrelated segue. You’ll hear a lot this weekend about asylum seekers being detained offshore at the behest of the government we elected (unhappily, a position supported to by the Federal Opposition).

Asylum seeker and refugee advocacy groups will be holding rallies and marches on Palm Sunday, once again trying to make this a major election issue.

So even if your housekeeping has revealed it will take until Easter next year to pay off those three credit cards that seemed so alluring at the time, what’s one more book, bought new and donated to those poor buggers detained without charge on Manus Island, Nauru, Christmas Island or in mainland detention centres?

As Amnesty International found, there is an insatiable appetite for multi-lingual dictionaries in Australia’s detention centres. Donors have so far given Amnesty 4,200 dictionaries in Farsi, Tamil, Vietnamese and other languages. Each dictionary will be hand-delivered or individually mailed to someone who’s asked for one, along with a message from the donor.

However tempting it might be to buy the Arabic translation of Noam Chomsky’s World Orders – Old and New (yes, there is such a thing), a Hindi dictionary or a set of Beatrix Potter books for the little detainees would be a better choice. Get your card out and start looking at ways to help. #LetThemStay.

Darwin Asylum Seeker Support and Advocacy Network, Asylum Seeker Resource Centre; Amnesty International.