‘It’s Not Me It’s You’ – Sneaky Bank Deals for 2011

Two months ago the media was in full bank-bashing mode. Politicians responded in kind: Wayne Swan moved to ban exit fees, Bob Brown wanted free accounts and freshly baked cupcakes at every branch.

Then on Valentine’s Day the NAB launched their highly successful ‘Break-Up Campaign’. The other three did their part, issuing full-page press ads to combat NAB’s social media stunts – like fake YouTube break-up videos and paying a pianist to play out the front of its rivals’ branches.

Their message was clear. The big four – who gouge around $20 billion a year in profits – were suddenly fiercely competing. ‘Don’t believe us? Here, listen to our break-up CD that we’re giving away at railway stations. No regulation needed. Everything is fine.’

Uh-huh.

Truth be told, though, some of the banks are offering some pretty good deals at the moment. Yet they also know that only a small percentage of the population will bother to grab them. But since you’ve read this far, I’ll assume you’re a bit of a rate tart. With that in mind, here are my independent reviews of the best deals going around.

Fee-free banking

The ING Orange Everyday Account is a good option if you’re a bit free and easy with where you stick your plastic. It has no monthly fees, and no ATM fees, anywhere, so long as you withdraw $200 or more each time.

The big four have some okay transaction accounts. The best of the bunch is NAB’s ‘classic banking’ option, which is fee free (but you’ll still be slugged for using non-NAB ATMs). The other three have so-so deals that (mostly) waive certain fees in return for having your wage deposited. Yawn.

If you want to keep it in the community, most credit unions offer great accounts and good service, but as a general rule don’t have a large ATM network (unless it’s Bendigo Community Bank).

Back to the deals

Best online saver account

Media group Choice reckons we’re giving the major banks a free kick of $7.3 billion by keeping our cash in two-parts-of-bugger-all-interest-paying transaction accounts (while the banks take our money and lend it out at higher rates).

True, but then again the banks have resorted to playing pricing tricks to lure and bamboozle savers. Example, Virgin: their online saver account pays 6.51 percent, but only for the first four months − after that it reverts back to a standard 5.35 per cent. But they’ll offer you a $50 bonus if you have a $1,000 savings plan per month. (I think Branson’s boys spent a little too long in the war room on this one).

UBank USaver has the market-leading standard rate of 6.01 per cent. If you set up a direct debit of $200 a month, you’ll get 6.51 percent. Stick with that. If they start playing games, move on.

Back to the deals

Best term deposits

Whenever someone receives a significant windfall, I nearly always advise them to pop it in a term deposit. This gives them a decent rate of interest and goes some way to protecting them from Uncle Larry and his Iraqi dinar money-making scheme.

Ninety-day term deposit rates are rubbish – you’d be better off in an online saver. But the longer you’re willing to leave it, the (slightly) better rate you’re going to get. Rabobank is paying 6.6 percent for 12 months, while the Teachers Credit Union is paying 6.57 per cent (with a 2 percent withdrawal penalty).

Back to the deals

Best credit card deal

Since the financial crisis, Aussie households have been increasingly paying their credit cards in full each month. In that regard people are using their cards as a convenient payment method rather than an expensive way to fund a new telly.

The Bankwest Zero MasterCard is the best of a bad bunch. It’s got no annual fee, a 16.99 per cent interest rate (that you should never, ever pay), 55 days interest free, and a rewards program (which you’ll probably never get anything back from).

In the past I’ve advocated playing credit card roulette − transferring your debt to a zero percent balance transfer deal and then paying it off. Yet experience has shown me that some people get sucked into spending on the new card (which is why the banks offer teaser rates in the first place).

A better idea is to ring your bank’s hardship department and explain your predicament. Maybe you’ll get a lower rate, or a temporary freeze on your repayments. I’ve seen both happen. Then do whatever you can, as quick as you can, to domino your debts.

Back to the deals

Competitive Home Loans

Despite what Wayne Swan says, navigating the mortgage maze is tougher than you’d think. That’s why whenever I find myself looking for a loan I pay an independent mortgage researcher to work on my behalf. So I had researcher Michael Lee, of Keyfacts, hunt down the best deals on the market.

For a variable loan, the AMP Bank Home Loan came up trumps. It has an interest rate of 7.02 percent, set-up and establishment fees of $545, and no ongoing fees. Importantly, it has a 100 percent transactional offset account, unlimited extra repayments, and fee-free redraw. The downside is they’ll slug you $1,000 if you leave within the first four years.

UBank’s UHomeLoan was another contender. Their current rate of 6.99 percent is one of the best on the market – and even better because they have no application fee, no ongoing fees and no exit fees. The reason it wasn’t our top pick is because it’s only available for people who are refinancing and have at least 20 percent equity, and there’s also no offset account.

The best three-year fixed interest home loan was from CUA, which has a rate of 7.19 percent, unlimited extra repayments, fee-free redraw, and an offset account.

The Commonwealth Bank’s Wealth Mortgage Advantage had a slightly higher rate of 7.24 per cent, but comes with the option of locking in your rate from the time you apply (which is good if rates change in between signing contracts), which most banks don’t offer.

The thing to remember about home loans is that there are a number of variables that will determine your end offer: the amount of equity you have, your credit history, and the location of the property. That’s why it’s important to shop around – or pay a researcher to do it for you.

Back to the deals

Good value pet insurance

My golden retriever, Buffett, is recovering well from his tiger snake taste-testing. During the week the vet rang and gave him the final all-clear. (I told her we’d had a minutes’ silence to commemorate the $6,000 that had left my bank account.)

I’ve now taken out Medibank Private’s Silver Paw Cover, which has an annual premium of about $250 (with a $500 excess), and an annual benefit limit of $12,000. As with all insurers and mothers-in-law, conditions apply.

Read more about the best pet insurance deals here.

Cheap online share broker

Figures out last month from Morningstar show the average fund manager underperformed the market in 2010. Worse, they hit investors with high fees for the privilege.

That’s why sidestepping the financial funds food chain and investing directly is such a good idea. Bell Direct is consistently one of the cheapest online brokers. They’ll let you buy and sell shares online for $15 a trade, or 0.1 percent for trades over $15,000. (If you feel the need to speak to someone over the phone, call your granddaughter and get her to do it online for you.)

Banks and other financial services companies have learned a thing or two from supermarket marketing; most have a great value, loss-leading product as a way to get punters in the door. Smart Barefooter’s can cherry-pick these deals and save a fortune.

In retrospect, all the NAB marketing campaign did was really confirm what we’d always suspected: the banks really are in bed together. And all a slick social marketing campaign did was reinforce that fact.

So maybe you should listen to NAB and break up with the financial leeches in your life. I’ve done all the leg work, now repeat after me.. ‘it’s not me it’s you’.

Tread Your Own Path!

Now read: My guide on how to manage your money in 10 minutes

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*Rates are correct at time of publication, and may have changed. Please check with the relevant provider.