Don’t let the banks cash in on your bad habits
With another run of record profits on the board, we shouldn’t be paying the banks a cent more than is necessary.
The big banks made almost $5 billion after tax last year. With more record profits rolling in, it looks like they’re in for another bumper year.
If you don’t want to become just another dollar sign in their large and growing bottom line, here’s what you have to do:
1. AVOID ACCOUNT FEES
I can’t remember the last time I paid a bank fee. If you get statements online and use internet banking, all basic services should be free. If not, make a fuss. Banks have lowered or dropped a whole raft of fees in recent years, so let’s keep the pressure on.
2. READ THE FINE PRINT
Unfortunately, there are still plenty of penalties for unwary customers – the likes of unarranged overdrafts, failing a loan payment, or exceeding credit card limits. Visit your bank’s website and read through the list of fees so you know exactly what you’re up against. Some of these penalties are no joke, and you usually won’t have a leg to stand on if you do get stung.
3. CUT UP YOUR PLASTIC
These are a huge moneyspinner for the banks. If you can’t repay your credit card in full every month, you shouldn’t have one at all. Even though interest rates are near rockbottom, credit card rates are somehow still eye-wateringly high. If you’re already in debt, consider a balance transfer to a zero or low-interest promo rate, then hustle like crazy to repay it before the normal rate resumes.
4. NEGOTIATE A LOWER MORTGAGE RATE
When it’s time to renew your home loan, be sure to shop around. Even a small difference of say, half a percentage point, can have a major impact. If you find another lender offering a sharper rate, ask your bank to match it. If you’re a good borrower, they’ll go out of their way to keep you on their books. If they don’t, you can always vote with your feet.
5. THROW YOUR WEIGHT AROUND
It doesn’t stop at mortgage rates. If you’re a valuable customer, you have a lot more power than you realise. You can ask the bank to waive any annoying fees you don’t like the look of, sharpen their pencils on an interest rate, or sweeten a deal with some freebies. Nothing is ever set in stone. Remember that your bank doesn’t care about you, except insofar as you can make it money. Business is business.
6. COMPLAIN EARLY, COMPLAIN OFTEN
123RF If you think you’ve been treated unfairly, don’t just roll over and take it. Complain to the bank, and if that doesn’t work, contact the Banking Ombudsman. This is an independent disputes resolution scheme that has resulted in $40 million of compensation being paid out to disgruntled customers. You’re not guaranteed to get a win, but it’s completely free to use, so there’s nothing to lose.
In the banks’ defence: While the profits they’re wringing out of us are stupendously large, that’s mostly because they run enormous businesses. If they weren’t making money, then we’d really have something to worry about.
With that being said, these are not exactly poor starving waifs in need of a hand-out. Make sure you do your bit to keep them on their toes, and don’t pay them a cent more than you absolutely have to. Got a burning money question? Email Budget Buster at richard.meadows@thedeepdish.org, or hit him up on Facebook, where you can also find links to previous Budget Busters.