Australia’s banks are some of our largest and most profitable institutions. How do they make such big profits? From you, their customers.
We say 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.
Make your money work for you
Kochie’s 4 Week Money Makeover
1. 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.
Negotiate the interest rate on your home loan (the headline rate is for mugs). Negotiate your 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 what the banks are willing to offer straight off the bat, but 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.
2. 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 RateCity 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.
3. 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.
4. And 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.
5. 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 believe we pay over $500 million worth of unnecessary fees by using third party ATMs. 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.