The big 4 Australian banks despite other banks around the world doing it tough due to the GFC, are claiming the cost of wholesale borrowings are getting more expensive and they need to pass this on. According to the Federal Treasurer and the opposition shadow Treasurer this is not true.
Despite these extra costs they are making record profits. Does this seem fair?
You are paying for the Big 4 Bank Profits.
“ANZ Banking Group Ltd says its third quarter net profit was up 37 per cent“
“THE Commonwealth Bank has delivered a record $5.66 billion profit, fuelling claims of profit-gouging“
“The National Australia Bank has reported a 63-per cent jump in full-year profits to $4.2 billion“
“Westpac profit soars 84% to record $6.4bn“
Here’s what you can do to beat them at their own game.
Get out of your comfort zone!
Most Australian’s bank with the big 4 (ANZ, Commonwealth Bank, NAB and Westpac) and most people have, bank transaction accounts, savings accounts, credit cards, car or personal loans and a mortgage or home loan. If you take a little time to compare whatâ€™s available, get out of your comfort zone and actually move your custom to the better alternatives you will save money and force the big banks to compete.
Did you know three of the big 4 actually have smaller subsidiaries.
- Commonwealth Bank owns Bankwest.
- NAB owns UBank.
- Westpac owns St George Bank.
These subsidiaries typically allow the big banks to engage in more competitive practices to combat the lesser known players (in Australia) such as ING Direct, Rabo Australia, Citibank and HSBC. You will typically find that the interest rates offered by these subsidiaries and lesser knowns banks are more competitive than the big 4.
Now note the last banks mentioned. These are not small banks but some of the largest banks in the world whom have an Australian presence. If you are worried about having your money or loans with banks smaller than the big 4 then this is not a reason to discount these banks.
You have to be prepared to widen your view past your childhood school bank account if you want to save.
You don’t have to have all your eggs or bank products in one basket because managing multiple accounts with internet banking is easy.
One bank might have the best home loan rate whilst another might have the best savings account interest rate. Using the net makes it easy to transfer money between banks and you can ask your bank not to send you hard copy statements to cut paperwork.
Kick them where it hurts. Show them what loyalty means. Don’t get mad, get even.
Top 10 Ways to Screw the Big 4 Banks
1. Transfer all surplus cash to a high interest savings account. Compare high interest savings accounts.
2. Transfer your mortgage to a lower interest rate home loan. Use a reputable mortgage broker to save time.
3. Open a no monthly fee transaction account and arrange for your wages to be deposited into it.
4. Pay down or pay out outstanding credit card balances and close the card or transfer to a no annual fee credit card.
5. Balance transfer large credit card debts to a low interest credit card.
6. Don’t get sucked in by credit card rewards programs that you fund with higher fees. Transfer to a low interest or no annual fee credit card.
7. Debt consolidation. Amalgamate high interest loans (personal loans, car loans, credit cards) into your home loan and keep making repayments at the old level.
8. Check out the more competitive subsidiaries – CBA/BankWest, Westpac/St George, NAB/UBank.
9. Play them off. Tell your bank you are going to leave for a lower cost competitor and ask them to match it. Check exit fees payable before taking any action.
10.Get the best banking product wherever you can. With internet banking you don’t need to have all your products with the same provider.
Compare, move and save or they will treat you as they do now.
Warning: The majority of bank loan products (home loans and personal loans) and some other bank products will have exit or early repayment fees that may be applicable. You must find out what these are before taking any action. Any decision to change products must take these factors into account. Please seek advice from an appropriate professional adviser before taking any action.