5 ways to get a better deal from the big banks
Australia’s banks are some of our largest and most profitable listed companies, with the Big Four on track to rake in close to $30 billion in profit this year.
How do they make such big profits? From you, their customers.
By not passing on full Reserve Bank rate cuts, charging sneaky or excessive fees, not bothering to tell you there are better deals available.
We say it’s time to put an end to this culture of getting screwed over by the banks. Don’t get mad… get even!
Here are 5 ways to turn the tables on your bank and make sure you’re getting the best possible deal.
- Negotiate on EVERYTHING
If you don’t ask, you’ll never know. Simple.
In many cases, your bank would rather keep your business than lose you to another institution. So get motivated, take the initiative and give them a call.
What can you negotiate? Everything. Negotiate the interest rate on your home loan (the headline rate is for mugs). Negotiate you credit card annual fee, your regular bank fees (ideally you want to stop paying them) and even the perks you receive. You may be surprised at what the banks are willing to offer straight off the bat.
And it never hurts to go in with a bit of extra ammunition. Compare your bank with others and what they offer to give you some leverage in your battle for a better deal.
- Don’t be afraid to switch
If your bank’s not prepared to play ball, it could be time to pack up and leave. Because if they’re not loyal to you, there’s no need to be loyal to them.
Switching has become a lot easier with a lot of institutions offering to do all the paperwork for you.
Check out one of the many comparison websites out there (like Mozo and Canstar) to browse and compare offers from other banks.
Switching is simply a numbers game; if it turns out you’re better off elsewhere then don’t be afraid to pull the trigger and leave. Every little bit counts.
- Minimise the interest you pay
Paying interest is a parasite on your wealth, sucking money out of your pocket and straight into the bank’s. So you should always aim to pay the least amount of interest possible.
Focus on cutting out “bad debt” like credit cards and car loans first. These generally charge the highest rate of interest and long-term they don’t get you anywhere.
Once you’ve ditched these, turn your attention to bigger debts such as the mortgage. Yes, negotiate the rate, but also do everything you can to get ahead on your repayments (mortgage offset accounts can be a great option here).
The quicker you can pay off the principle, the less interest you’ll have to pay to the bank.
- Maximise the interest you receive
As well as minimising the interest you pay banks, maximise the interest you earn on your own money. Savings sitting in transaction accounts earning piddly returns are actually going backwards thanks to inflation, so compare the high interest online savings accounts in the market and find the place to store your money.
Take advantage of bonus periods and other offers to eek out every last cent of interest you can from your bank… remember, your bank would do the same to you.
- Stop paying unnecessary fees
Credit card fees, account fees, ATM fees. Australians are up to their eyeballs in unnecessary fees and if you have any sense you wouldn’t be happy about it.
The first step is to look at all your banking accounts. Cut redundant accounts, make sure the accounts you have are the best ones for your circumstances, understand the conditions of the accounts and always stay within the terms.
For example, would you believes we pay over $500 million worth of unnecessary fees by using third party ATM’s. That’s just lazy. Our suggestion? Use your own bank’s ATM!
Cancel unneeded credit cards, switch to a fee-free bank account, organise your finances to avoid overdraft or late fees and put the money back into your own pocket.
WHEN TO REVIEW YOUR SUPERANNUATION
Superannuation is an important and often overlooked aspect of our finances, but if we want to have a comfortable retirement, we need to pay attention to what’s going on.
And while we should always have our super in mind, there are some times that are more important than others to make sure you’re still getting the best possible performance from your fund.
- When you change jobs
Your new employer will give you a form to fill out for your superannuation details.
If you’re in the same industry, provide your current fund details to continue using that fund.
But if you’re starting a new career, consider which super fund is best for that industry. If you do open a new account, make sure you transfer all of your funds to the new one, or you’ll be paying two sets of fees for no reason.
- When you move house
Your super fund should always be up to date with your latest details, most importantly, your address.
It’s a good idea to take this opportunity to review your entire account and whether it’s still the right fit for you.
You can use any number of comparison websites to see how your fund measures up to all the others.
- Every 1-2 years
You should review your super fund at least once every two years for a number of things.
To make sure your details are current, that you’re aware of all the fees you’re paying and that you are taking advantage of useful extras like income protection.
If you want to know more about how your money is being invested, call your fund and speak to a professional who will talk you through it.