Rebelling against banks can make them lift their game
How long have you been with your bank? When was the last time you switched all your accounts to another bank?
If you’re like most Australians the answer will either be “never” or “years ago”.
And there’s your reason why bank service will never be quite up to scratch. It’s us. We’re bank suckers. We talk about how banks treat us, and the poor level of service, but that’s all we do. Talk.
We don’t walk the talk and actually do something about it. We just whinge about how we’re treated.
If we acted on those gripes then we’d see bank service improve out of sight.
Why do we change supermarkets, phone companies and even partners more often than we change banks.
So toughen up, and make a difference. It’s your money, you’re the customer, demand some service.
But do your homework first and beat the banks at their own game. If you’re well informed about what you’ve got, and what you want, then your arguments will be that much more persuasive.
The first of all, understand your banking and credit card habits and make sure you have the right accounts. With a day-to-day account, how many transactions do you make, are they electronic, do you need a cheque book or are you happy with internet banking.
If you love going in to a branch and have a transaction account which offers great deals on electronic banking then you will be paying high fees. Match your banking needs to your transaction account.
The same with a credit card. If you never seem to payoff the balance on the due date, choose a credit card with a low interest rate and no interest free days. If you regularly pay the balance off on time then interest free days are an advantage.
Make sure you check out the deals offered by your financial institution. Many offer discounted fees for pensioners, students and a range of professions. But it’s up to you to ask the question and ask for a better deal.
If you play sport, it’s worth a call to the state association headquarters on the off chance they’ve done a deal with a financial institution to offer their members.
The Internet is a great way to check how your current bank accounts compare with others on offer. Canstar Cannex, Infochoice and Choice have great tables comparing every bank product by interest rate, fees and conditions.
If you have accounts which aren’t as attractive as what’s offered elsewhere, ring the bank and ask whether they can do better. You’ll be surprised at what might happen.
If you’re a good customer they’ll either give you a better deal or recommend a different account which will be more attractive.
If they tell you they can’t help then move to better deals elsewhere. Choice’s website has a step by step guide to changing banks including pro-forma letters and emails to send to close accounts.
We’ve run two big campaigns on Sunrise to fight the banks. We’ve suggested home loan borrowers ring their bank manager and ask for a better interest rate. It was extraordinary how many people had 0.25 per cent shaved from their home loan rate just by asking.
The other was against those insidious $50 penalty fees if your transaction account is inadvertently overdrawn. If you’re slugged with this penalty ring the bank and complain about it being against contract law and they’ll usually cut it in half.
If you have a couple of products with your bank - like a credit card, home loan, transaction account, insurance policy, managed investment - then you are an important customer. Banks have figured out the best way to grow their business is to try and sell more products to their existing customers rather than try and attract more.
A core growth strategy of banks is to double the number of products sold to their average customer. As a result they offer deals where fees are reduced, or even abolished in some cases, for some customers with more than one bank product.
Some banks also offer their shareholders lower fees on home loans.
Looking outside the big banks can also pay dividends.
Credit Unions generally offer accounts which carry lower fees as do some of the smaller banks such as Bendigo Bank which have to provide innovative, low cost products to build their customer base. Bendigo is the bank behind the flourishing growth in community banks.
Remember Credit Unions and the smaller banks operate under the same regulatory framework as the big banks and have been part of the same Federal Government deposit guarantee program. So they’re just as safe as the banks.
So get to it. Fight back and you’ll get better service.
David Koch’s financial advice column appears in the Your Money supplement in News Ltd newspapers every Monday.
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