Dollarmites Out!

Yay! You made it into the Yarraville West Primary School newsletter:

“After consideration, school Council has decided that Yarraville West PS will no longer host the CBA Dollarmites banking program. Financial literacy is important, perhaps now more than ever. There are independent educational initiatives available for your family to investigate together, such as the federal government’s MoneySmart or books, and Scott Pape’s Barefoot Investor for Families.”

Thanks for educating our educators!

Susan

Hi Susan,

Thanks for sending this through!

Just to clear things up, my new school program isn’t about me selling books (I’ve sold enough already, and anyway, I’ve donated a copy to every school library in the country).

This is a not-for-profit program, and it’s funded from my own pocket (no funding from banks!). That way, I’m free to explain to the kids how much of a rip-off credit cards are, why Nimble loans suck, and the hidden cost of UberEats.

Now, since I launched the Barefoot Money Movement a few weeks ago, I’ve had thousands of teachers apply to pilot the program later in the year, from schools across the country and around the world.

My biggest discovery?

We are truly blessed to have so many hardworking teachers educating our kids.

Seriously, they’re passionate about their students and are determined to ensure they learn these lessons.

It’s been a very humbling experience.

Thank-you for reading,Scott

Scott

St George Bank Swanns Around

Hi Scott,

I am having all sorts of problems trying to cancel the credit card insurance that was added to my St George credit card when I first took it out. I was told that, as I was a single mum, I would not get the card without it. It is just under $90 per month! I cancelled it over a month ago and they are still debiting my card. St George say it’s not them and to call Swann Insurance, who say it’s not them. In the meantime it has overdrawn my account. Please help.

Louise

Hi Louise,

The St George Bank website says: “Please note Credit Card Protect is no longer sold.”Do you know why they’ve stopped selling it?

It’s not because for years it was known in the industry as ‘junk insurance’ and was hard-sold to unsuspecting customers. That’s exactly why they sold it in the first place ‒ they made a fortune out of it!

No, the reason the banks stopped flogging it is because it got the Royal Commission treatment, and, as a result, banks and insurance companies could be looking at stumping up more than $1 billion in refunds.

The Consumer Action Law Centre has set up a free website that makes it easy to claim: demandarefund.com

Yet you don’t have time to wait.

I can’t imagine how distressing this must be for you. You’re a struggling single parent, and you’ve done the right thing, but still had your account has been overdrawn over Easter ... and then probably been hit with more fees!

And it sounds like they’re giving you the run-around: I mean, who cares about a lowly single mother, right?

So let’s you and I take this to the top.

Ross Miller is the General Manager of St George Bank.

Here’s an old party trick: when you mention a bank executive’s name in print, it pops up in their media tracking service. Which means this column will soon land on his desk.

So, Ross Miller, I think you should refund this single mother all the outrageously expensive premiums she’s paid, plus any overdrawn fees or penalties.

Over to you, Ross Miller of St George Bank.

Scott

ING Is Not Ethical

Hi Scott,

Love your work. However, I was disappointed to see a news piece in the weekend paper about super funds being less than transparent about their ethics. I was also disappointed to discover that ING invests in coal. Saving money is important to me, but so is using my money ethically. So my question is: can you recommend a truly ethical super fund and bank? And could you consider taking ethics into account when you make recommendations?

Janice

Hi Janice,

Can I recommend an ethical super fund and bank?

No, I can’t.

It would be unethical of me to presuppose other people’s ethics.Some people are like you – they really care about the environment. Others couldn’t give a Clive Palmer.

My job is to educate, empower, and find the best deals without fear or favour.

Then you – the end user – should apply your own criteria.And that’s why I don’t rate ‘ethical’ or ‘socially responsible’ investments.

The article you mentioned cited research from an environmental group called Market Forces which found that some ethical super fund options, from the likes of Hostplus, CareSuper and AMP, don’t disclose the companies they invest in. For example, AMP’s ethical fund holds fossil fuel mining companies.

Then again, AMP argued that it ‘only represents 2% of the portfolio’.

Interesting rebuttal.

That’s like dating what you think is a straight-laced marrying type, only to find he’s just gone on a week-long crystal meth bender. “But I only get on the gear when my bro Tino is in town! It’s, like, 2% of my year. I’m totally legit 98% of the time, babe.”

Right.

My main tofu with ethical funds is not about what they invest in, but that the majority are ‘free range’ in how they charge. “A sizeable number of ‘sustainable’ funds produce sub-optimal returns at relatively high fee levels”, according to SuperRatings.

Personally, I’d rather invest in a low-cost fund and be tens of thousands of dollars better off. Then I can choose to donate the difference to causes that I care about.

Then again, they’re my ethics, not yours!

Scott

Reminder: I first wrote about this years ago and highlighted the low fees. Today there are cheaper index super funds on offer. How do I know? Because my readers constantly email me about them! So before you do anything, go to YourSuper.gov.au and compare super funds first.

The Dollarmite Rebel

Hi Scott,

I purchased your latest book, The Barefoot Investor for Families, and gave it to my nine-year-old son, who has taken to it like a duck to water. He is enthusiastically helping with cooking, and has set up his three jam jars. He has a presentation at school coming up and, due to inspiration from your book, he wants to do his talk on why his school should give Commbank the flick. I don’t want to discourage him, as I too believe in the cause -- but is it something best left for parents to bring up with the school?

Barry

Hi Barry

What do I reckon?I reckon this sounds like a life lesson he’ll remember for years to come.Here are a few things I’d talk through with your son:

Explain that a credit card is a very expensive loan from a bank. Young people often get themselves in a lot of trouble with credit cards by borrowing too much. Credit cards tend to make everything you buy much more expensive. For most people -- especially young people -- the best credit card is no credit card.And perhaps he could ask:

Why does Commbank’s Start Smart Program teach kids -- in grade three -- about the benefits of credit cards?

Then he could ask his teachers:

Have you ever got in trouble with a credit card?When we get older, should we get one?

A big part of financial education is to be skeptical about what banks (and advertisers in general) offer up.

You’re teaching your son to be an independent thinker and to intelligently and respectfully question authority.

In this case, he’s got truth on his side: there is no justification for allowing a bank to spend millions of dollars for the exclusive right to teach our kids this core life skill, much less for rolling out a marketing program that is worth, according to one analyst, as much as $10 billion!

Let me know how he goes!

Scott

Is Dollarmites Done For?

Hi Scott,

I read in the news this week that ASIC are finally launching a review into school banking -- maybe it has something to do with that book of yours! What is your view on this? Do you think this could get the banks out of our schools, or is it still too early to get our hopes up?

Ethan

Hi Ethan,

Here’s what I hope the ASIC review will discuss:The Commonwealth Bank’s school banking program has, according to their website ‘been teaching generations of young Australians the importance of saving and lifelong money skills since 1931’.

So let me ask you this:

If what they did worked, why do we currently have record household debt, and low savings?

How did we end up with the horrors of the Banking Royal Commission (where Commbank received a gold medal for charging fees for no service to dead customers, ripping off millions of dollars of retirees’ money)?

And why are school leavers the most financially illiterate of all Aussies, according to ASIC research?

The answer, I believe, is that up till now many schools haven’t given financial education the emphasis it really deserves — possibly because they wrongly assume that Commbank is taking care of it.

The best outcome from this ASIC review would be that schools finally understand that financial education is a core life skill, that is far too important to be outsourced to a bank that pays millions of dollars to market to our kids.

Thanks for reading,

Scott