Each year, without fail, the first Christmas card I get is … from my bank.
They never forget, bless them. They’re more regular than the fat man when it comes to doling out the Christmas credit.
So let’s you and I save a thousand bucks next weekend by screwing the banks over and getting some sweet financial candy canes.
Best Mojo Money
Here’s the first sign your bank thinks you’re a sucker: transaction accounts pay, on average, 0.01 per cent in interest. Which means that, if you keep $5,000 in the account, your bank manager will tip you a shiny fifty cent piece annually.
Here’s you: “Yeah, yeah, but I can’t be bothered with a high-interest account.”
Here’s me: “There are set-and-forget automatic ‘sweeper’ accounts that do all the hard work for you.”
So here’s what to do: sign up for a UBank USaver Ultra account (UBank is NAB’s Jetstar brand).
It pays no interest but has a ‘sweep’ facility that automatically transfers your money into a linked high-interest account. So as long as you’re saving $200 a month, it (currently) pays 4.02 per cent. On that same $5,000, you’ll earn $201 a year.
It’s not going to make you Jamie Packer, but if you saw four $50 notes on the sidewalk you’d pick them up, wouldn’t you?
Best Term Deposits
Here’s the second sign your bank thinks you’re a mug: the banks have been dropping their interest rates on term deposits, even though the Reserve Bank hasn’t moved rates since August 2013.
If you come into some money, you have two options: if you’ve got a mortgage, park it in your offset account. If you don’t, stick with an online savings account — you’re not getting enough of a premium to be locking your money away in a term deposit.
Best Bank Accounts
Here’s the third sign your bank thinks you’re a drongo: you’re not getting fee-free banking. If you’ve got a home loan, that’s just plain rude. Call them. Immediately. Seriously, WTF?
If you don’t have a mortgage, move to ING Direct’s Orange Everyday account, which has no account keeping fees, gives you 2 per cent cash back on payWave purchases under $100, and charges zero ATM fees no matter what — as long as you deposit $1,000 a month into the account.
Best Credit Cards
Here’s the fourth sign your bank thinks you’re an easy touch: since 2011 interest rates have dropped to historical lows, yet the banks have dropped their credit card fees by a spectacular 0.2 per cent over the same period.
Roughly 30 per cent of Aussies fail to pay off their card each month. The average card has $4,200 on it, racking up around $840 a year in interest — compounding. So for me the best credit card is no credit card.
Here’s you: “What about getting 55 days interest free?”
Here’s me: “I’ll admit it tickles my tightwad loins, but just make sure you’re not paying an annual fee, and watch how the bank calculates the interest period, or you’ll get hit with a 20 per cent interest bill.”
Here’s you: “What about rewards points?”
Here’s me: “Each point is worth between half a cent and four cents, and the airlines (who make billions from these programs) keep changing the rules. Find a new hobby, trainspotter.”
Here’s you: “What about balance transfer deals to pay it off once and for all?”
Here’s me: “They’re like a chainsaw — helpful, but there’s always a chance you’ll slice your hand off.”
Still, it can work. If you’ve got the average $4,200 credit card debt, it’s time for some plastic surgery:
Step 1: Cut up your card.
Step 2: Apply for the Virgin Money no annual fee card, with a 16-month balance transfer.
Step 3: Cut up the Virgin card when you get.
Step 4: Pay off $150 a fortnight and it’ll be paid off in 16 months.
Best Travel Cards
Here’s the fourth sign your bank thinks you’re a chump: travel money cards are called ‘commission free’ yet leg you on the exchange rate. Still, these cards are good for preloading currency ahead of time.
You should also look at open a Citibank Plus Account for your next trip. It has no transaction fees, no ATM fees, no currency conversion fees — and it offers a decent daily exchange rate.
Best Home Loans
Here’s the fifth reason your bank thinks you’re an easy target: banks leave their existing customers on the expensive ‘standard variable rate’ and offer cheaper deals to lure in new loans. In fact, if you want a really low home loan, you might want to bypass the big banks altogether.
One of the sharpest deals is from Heritage Bank, which this week cut its rate to 4.39 per cent — 1 per cent lower than the big banks. The loan is only available to people with at least 20 per cent deposit (or equity in their homes), though, and it doesn’t have an offset account.
A word of warning: If you do have less than 20 per cent equity in your home, don’t refinance. Most banks will whack you with a second round of Lenders Mortgage Insurance (LMI), which can cost upwards of $25,000. Bugger that.
The quickest, easiest way to get a cheaper home loan is to whinge to your current lender. If your loan doesn’t have a “4” in front of it, you’re in the box seat to screw down your rate.
So there you have it: if you spend the weekend switching to these accounts (who am I kidding? — you’ll do it at work on Monday morning), you’ll save yourself grand or more.
And that’s the final way the banks think you’re crazy lazy: they know you’ll read about these deals but not do anything about them. So prove them wrong!
Tread Your Own Path!