As a consumer advocate, you will be surprised by the fact that I actually like Australia’s major banks of (ie. Commonwealth Bank, ANZ, Westpac and NAB). And no, I am not affiliated or work for any bank.
Why may you ask?
Well for one, we would be a lot worse off, if our banks weren’t profitable, stable and continuing to grow. Strong economies need strong banks, without them citizens can’t finance the activities required to allow the economy to grow.
Two, banks often receive bad media press, when they haven’t in fact done anything wrong. The purpose of a bank is to provide a monetary service to their customers, if people have chosen to enter into a mortgage, personal loan or business loan, they need to be accountable for it. Don’t get me wrong, I am sympathetic for people who are suffering from mortgage stress (10% of all Australians are currently suffering from it in 2011),
However, if you can’t realistically finance a home, business or personal loan don’t get into one in the first place. It’s that simple.
So how do you know if you are financially stable to finance such a debt?
Easy, just work out what your monthly repayments would be if the interest rate increased by 2-3%. If you have no problem making the repayments at that rate, well then you can enter in the loan. If however, you are struggling to see how you will find the money – DON’T DO IT. Remember, interest rates maybe low at the moment, but they can and will increase in the future.
Three, consumers can be lazy. If you aren’t happy with your bank tell them about it! People’s attitude towards banks is much like insurance, they complain to friends and relatives about the issue, but they don’t actually do anything constructive about it. I have on a number occasions personally rang the bank to discuss issues and as a result, I’ve had the following successes:
*Credit card interest rate cut down
*Removal of account keeping fees
*Cancellation of credit card annual card fee
The above wouldn’t have happened, if I didn’t take the initiative to contact the bank. It only took five minutes out of my day to reap such long term benefits.
TIP: Banks hate other banks, so play each bank against each other, you will be surprised as to what benefits you will gain. I know of people who were able to cut down their home loan interest rate, by calling their bank and asking them directly about the rate.
TIP #2: If you realise that you would have no problem paying off the loan at a higher interest rate, while interest rates are low, pay the same rate as if it was higher – you will be surprised by how paying an extra $50-$100 a month can save you so much money in the long term. After all getting rid of the banker is the best thing you can ever do, this is why when people finally pay off their mortgage they are ecstatic!
Until next time,
Cents and Sensibility
Julia Taine, Executive Director of Vent2Me, is a marketing problem solver and mentor. A mover and a shaker, Julia sees a niche in an industry, and takes it, by making it her own. Julia started Vent2Me, because people she knew were struggling with their online presence and their digital strategies. Julia knew she could help these people, and so here she is today.