17th Jan 2018

Banks do the dodgy on loyal customers

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Banks do the dodgy on loyal customers
Leon Della Bosca

The Big Four banks snuck the gift of an interest rate rise into the Christmas stockings of potential new customers, but proffered a lump of coal to loyal, long-term account holders.

Earlier this month, CommBank, National Australia Bank (NAB) and Wetspac cut interest rates on savings accounts, after ANZ started the ball rolling in December.

Many loyal customers are now earning less than one per cent on their savings.

With the threat of the royal commission looming, banks sneakily introduced the rate cuts to base accounts – accounts held by long-term customers – yet raised interest earned on introductory accounts being offered to new customers.



This was done to attract less public scrutiny. The banks cut the rates in order to save money, but are still able to advertise attractive headlines of ‘increased rates’ to the marketplace.

The base account rates are now 0.5 per cent at ANZ Bank and 0.8 per cent for the remaining three banks.

These cuts may seem minor, but they will have the most negative effect on older Australians who rely on the interest earned from savings accounts. In a time where the cash rate hovers around a record low, any interest returns are seen by long-term savers as precious. These new cuts will mean millions are lost to savers and, instead, kept in banks’ coffers.

Banks claim the cuts are necessary due to “credit growth expectations and competitive pressures”. They are encouraging savers to put their money in long-term deposits – effectively locking up the funds for the banks to ‘play’ with while reducing customers’ access to their savings.

The alternative is to put money into introductory accounts and move it to another when the special rates expire.

NAB says its new rates reflect the conditions of the market and its products “balance the needs of all of our customers and stakeholders, and take into account economic and market conditions”.

It could be argued that the needs of one are being looked after more than the other.

Were you aware that your savings interest rates were cut over the summer? Is there no reward for loyalty? Will you switch banks to send a message to yours?

Related articles:
Banks profit millions from rate cut delay
PM takes credit for interest rate cut
Aussies tired of unfair economy





COMMENTS

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outlander
17th Jan 2018
10:26am
I have been with N A B since the seventies and do not have so much as 1 brownie point, Banks remove A T M fees and lower interest rates. Its all smoke and mirrors banks don't give back..no surprises
On the Ball
17th Jan 2018
10:27am
They are banking on us not caring enough to do the work and walk across the road.
I have had a long association with my current bank.
I will ask the manager what is my current interest rate on savings.
If it has gone down or is less than the competition, I will give the Manager the option.
If they dont match the introductory rate of the opposition, goodbye.
We are talking several loans and a few cash deposit accounts with six-figure amounts.
Will they still say no?
ray from Bondi
17th Jan 2018
12:39pm
walk across the road to what, they are all deep inside each other's pockets, and collude to ensure that they are the only banking services we have access too, I am sure the ultra rich can bank whereever they feel like and from all reports send their money offshore so as to pay no tax.
Cowboy Jim
17th Jan 2018
10:45am
Changing all your arrangements just to save a few dollars only to subsequently lose them again does not make much sense to me. Of course should you have a couple of hundred thousands to spare you might think differently. The difference in credit card interest is more visible than earnings on everyday accounts.
On the Ball
17th Jan 2018
10:50am
Yes, you are right on both counts Jim.
But its also about sending a message.
Many years ago Commonwealth Bank said to me "Here's a $3000 loan. No interest, as long as you pay it back within 55 days."
Always have. Never paid any interest on my credit card.
I only put stuff on my credit card that I know I can pay for within 55 days.
fearlessfly
17th Jan 2018
11:47am
Spot on there "On the Ball", we do the same, we put $30,000 through our single credit card in a year and pay not one iota of interest on it.
Joy Anne
17th Jan 2018
11:13am
Bloody disgrace, I do not have much only the savings which I place there for Rego etc.
I will be changing my bank to Suncorp soon so really don't care about the NAB
Cowboy Jim
17th Jan 2018
12:22pm
Well, Suncorp just closed their branch near me and now I have to take the bus to the next town. Once they went to ReadyATM they
started to close down their own ATMs. I have been with Suncorp since building society days.
fearlessfly
17th Jan 2018
11:50am
False post to get this page to email me when comments are made. NOTE to YLC moderators/developers - allow the check box "Email me when comments are made to this article" to be activated WITHOUT posting a comment !
OnlyGenuineRainey
17th Jan 2018
11:50am
What is really disgusting is that the Federal Government is still using unrealistic deeming rates and an effective deeming rate of 7.8%+ applied to those with assets above relatively conservative thresholds (at least for younger retirees who may have up to 3 decades of rising prices and increasing health needs to contend with).

When will this stinking government recognize reality and adjust the rules to introduce some level of fairness.
ray from Bondi
17th Jan 2018
12:44pm
as a pensioner, I think it disgusting how our masters bash the needy and then use every trick themselves, they should deem that they are earning interest in Australia, the deeming rate is another attack on our freedoms, and banks do not offer proper deeming rated accounts any longer, if the government was serious they would ensure that the banks supported what force upon the defenceless.
ourjeffie
17th Jan 2018
4:45pm
My bank offers a "proper" deeming rate account - check out the Pension Access account offered by Australian Military Bank.
Knows-a-lot
17th Jan 2018
5:43pm
Vote out the LNP mongrels at the next election.
Annie
17th Jan 2018
8:06pm
Rainey, not sure where you get your info from... google deeming rates:

Asset value thresholds, effective from 1 July 2017: Singles: The first $50,200 of a person's financial investments are deemed to earn income at 1.75% pa (deeming rate effective since 20 March 2015) and any amount above $50,200 is deemed to earn income at 3.25% pa (deeming rate effective since 20 March 2015)Jun 22, 2017

Cheers
roy
18th Jan 2018
10:32am
Don't worry Rainey, once Shifty Shorten becomes PM we will be living in Utopia.
Knows-a-lot
18th Jan 2018
3:02pm
"Shifty" Shorten is infinitely preferable to Shithead Turdball and his troop of inept, soppy overprivileged wankers.
brainstraina
19th Jan 2018
6:56pm
THIS stinking government?? More like; ANY stinking government.
Careworn
17th Jan 2018
11:55am
Been with the Commonwealth Bank for years and I shall now be looking else where, but I'm thinking pensioners are sitting ducks, easy targets, so not expecting any fairness. Didn't realize that retirement was going to be like having a job and taking up so much time fighting to keep hold of my hard earned money from those clever wheeling-dealing schemers. Wish I had the taste for caviar and champagne and I wish it was healthy, as I would spend up big.
ray from Bondi
17th Jan 2018
12:48pm
I have done that in a half-hearted way and what I found out supported my belief all banks do the same and there is absolutely no difference in the way people and pensioners are treated, it is nothing but hornswoggle the statement that you can move to a better account, sure we might be able too if we are able to bank overseas like the rich.
ourjeffie
17th Jan 2018
4:48pm
I moved to a better account - - check out the Pension Access account offered by Australian Military Bank.
floss
17th Jan 2018
12:01pm
Support your local Credit Union have done for years.

17th Jan 2018
12:03pm
I know the solution. Here it is step by step........

(1) About 10 VERY well known, influential Aussies need to form a group for publicity purposes and to get the ball rolling

(2) They then formulate a VERY simple plan. The plan is ---- get as many Aussies as possible to totally desert 1 (just 1) of the big four banks, in other words place all their money and dealings in any of the 3 other big banks or elsewhere. That's it. The bank to be deserted will be chosen (via 1 ball chosen from 4 balls in a hat) after 1 month of the inevitable massive media publicity. The plan is then put into action, and people begin withdrawing from the chosen bank.

(3)Result: Immediately the chosen bank will be in the middle of a financial meltdown (but Australia as a whole won't suffer because the money will still be in Australia (just in other banks).

(4) Then what? One month later, an ultimatum is issued to the remaining 3 banks "lift your game or one of YOU are next". Result = amazingly the 3 banks will suddenly out of thin air announce AMAZINGLY beneficial terms and conditions to thousands of products, things that will actually benefit the "customer" to a MUCH greater extent than what's currently offered.

(5) What will happen to the original chosen bank? They'll recover and then in order to not go bankrupt they'll start treating the customer with the same respect as the other 3 banks are now treating their customers.

Problem solved.
Rae
17th Jan 2018
1:21pm
Actually Jim if we could organise we would be an amazingly powerful group and all the pensioner bashing would stop immediately.

I suggest something like a powerful new lobby group.

It seems others can do so.

The power of boycott is incredible if directed and supported.
OnlyGenuineRainey
17th Jan 2018
3:26pm
Yes, Rae. We should unite, but unfortunately there is too much self-interest among retirees and the politicians are brilliant at taking advantage of that to create division. Look at how they used the politics of envy to get support for the assets test change. Told blatant lies, but by chanting 'millionaires shouldn't get pensions' they got all the poorer pensioners up in arms about so-called ''greedy wealthy people'' getting part pensions. These same pensioners seemed to fail to notice that the claimed savings were given to people with hundreds of thousands, and not a cent to the really needy. But they are still raving on about not having hundreds of thousands, ignoring the fact that many who do are actually worse off than pensioners unless they draw on their savings until they are poor.

Then we have the magnanimous self-funded screaming that pensioners should have to forfeit their houses as repayment for pension income and shouldn't be allowed to leave their hard-earned assets to offspring (despite the greedy screamers demanding that obscene tax concessions continue, over-indulging them and building massive piles of assets for their heirs to inherit!)

If all retirees would stop thinking about their own situation and recognize that a concerted campaign for a fair, common sense overhaul of the system would benefit EVERYONE, we could unite to force positive change. With the right message, we could even win the support of younger Australians. A properly designed system would benefit EVERYONE.
Careworn
17th Jan 2018
12:08pm
Rainey, the deeming rates are disgusting. The government seems to think all retirees are earning high interest rates having their money in super or stocks and shares. Not wanting to have all my eggs in one basket and not wanting the government to force me into gambling on the stock market, which I haven't got the head for, means a large part of my savings is earning peanuts.
*Imagine*
17th Jan 2018
12:35pm
Yes Careworn, and here lies an example of what I posted the other day. The 'welfare savvy' know that for every $1000 held above the asset threshold, the age pension is reduced by $3 per fortnight or $78 per year. So if you have Money above the asset threshold then draw it out and spend it, or 'invest' it at home (under the mattress) and it will effectively provide an interest rate of 7.8%. I imagine that there are many people doing the latter. Stupid rules lead to creative solutions - and who can blame them.
OnlyGenuineRainey
17th Jan 2018
3:04pm
Financial adviser told me up to 98% of those affected by the assets test changes are spending hundreds of thousands either cruising and on luxuries or upgrading to luxury homes. ALL will need much larger pensions in years to come because of this IDIOTIC short-sighted policy change. Plus, younger folk are reducing their savings because they see that there's no benefit from saving. Aged pension costs will soar, but I guess the politicians who acted so stupidly won't care. They will have retired on massive taxpayer-funded pensions for life.
*Imagine*
17th Jan 2018
5:41pm
Rainey, I can't help wondering if getting the pensioners with 'lazy fluid assets' to help drive economic growth was the driver of the policy. If we think back to pink bats and other economy kick starts including the Keating "Can't kick a dead horse back to life banana republic!" The intent has been to get more money circulating. The ultra low interest rates have got nowhere else to go, so what to do? Imagine if we could get the pensioners sitting on nest eggs to spend, spend spend. How can we do that? I know ...... And here we are, they did it. Do they care about tomorrow? Of course not. Idiots is being kind - destructive unethical morons is more descriptive.
Greg
17th Jan 2018
6:31pm
*Imagine* I thought that was the point, to help drive economic growth, make them look good now and to hell with the future - because that won't be their problem. I'm sure I had read that somewhere a long time ago - maybe it was just my thoughts.
*Imagine*
17th Jan 2018
7:01pm
Yes Greg, a pity the policy makers didn't look further than the thought bubble though. Much of the money spent by the pensioners is on Cruises aboard foreign ships. Other money is spent on overseas travel supporting tourism in foreign countries. Then there is the import of foreign luxury cars and other goods. On top of this is the destructive effect on individuals and as Rainey points out, the 'hangover effect' of increased government support when the honey pot is empty. I don't pretend to have all the answers, that is why we pay top dollars to those who believe that the they do. Unfortunately, they don't do much better, and we are heading for a bigger national debt because of it. It would be funny (as in sitcom Utopia) if it was not so sad.
Annie
17th Jan 2018
8:25pm
Careworn,

1.75% excessive? Don't think so.

Asset value thresholds, effective from 1 July 2017: Singles: The first $50,200 of a person's financial investments are deemed to earn income at 1.75% pa (deeming rate effective since 20 March 2015)

and any amount above $50,200 is deemed to earn income at 3.25% pa (deeming rate effective since 20 March 2015)Jun 22, 2017.

Rabobank offer 3.05%
AMP 3.00%
MICK
17th Jan 2018
12:15pm
Just try getting nominal loan when you do not have work related income any more but have significant assets and no debt. Banks leave me cold.
roy
17th Jan 2018
2:57pm
good morning MICK, you had me quite worried with your absence, is everything OK?
Not a Bludger
17th Jan 2018
12:21pm
Moan, moan, grizzle & groan - simply bank bashing once more.

Can’t you permanently outraged find on other target?

Look on the bright side - at least, the interest rate is not negative or zero.
Cowboy Jim
17th Jan 2018
12:25pm
You are right, my sister overseas is on .5% negative interest at her bank. Funny thing though, a loan is still 10.5%. Should have shares in the bank, eh??
Rae
17th Jan 2018
1:28pm
Well cowboy if your sister is silly enough to leave money in a bank that charges .5% but pay 10.5% on a loan you should advise her it's not a great idea.

Better off putting it in a safe storage box at the bank instead.
Cowboy Jim
17th Jan 2018
5:46pm
Yeah Rae, you are right. My sister has no loan anymore but a box at
the bank also costs $250 per year. Under the mattress is better but she is afraid that the place might catch fire. Told her to buy her own place but she has no means test to bother her and she is happy in
her rental place which over there lasts her life time.
ray from Bondi
17th Jan 2018
12:36pm
the real problem is that governments have sold the lever they had to control costs, and for the younger who do not know that was the commonwealth bank, the government told us that we would have competitive cheap banking (https://www.allgovernmentslie.com/)
sadly ALL governments have been seeling of OUR assets bought with OUR money for short-term gains.
Rae
17th Jan 2018
1:30pm
They certainly have ray and one day the truth of where all the money has gone will come out. Just a matter of time.
Old Man
17th Jan 2018
12:59pm
Banks only care about shareholders, not customers. Shareholders have a vote and a say in the running of the business, depositors/borrowers don't. Yes customers can leave but where do they go? To another bank mostly and the cycle starts over. At the end of the day the customer is worse off because of all the extra fees or loss of interest because of moving from one bank to another.

We are told that banks can't stand in your way if you want to move and they shouldn't charge a customer any fees if they move. How wrong that is. If you are a borrower, there will be fees to discharge your mortgage and it's almost certain that there is a penalty written into the mortgage for early repayment. If you are an investor, you lose the interest for the month because you have not had the balance there for the entire month.

Let's look at the new bank. Fees to apply for the loan to pay out the former bank, legal fees to search the title deed, lodge caveats/mortgage and sundry establishment fees. Again, an investor loses a month's interest because the balance has not been there for the full month. And the government tells us that all of this will be fee free.

If you use your bank to receive direct deposits or pay out on direct debits, all of the companies involved have to be contacted to ensure a smooth changeover. Don't expect any help from the bank you are leaving. Back in the days when banks were regulated, your direct debits were referred onto the new bank, now they are sent back with the answer "Account Closed"

Deregulation of the banks may have been a necessary step for the Australian economy but in doing so, deregulation meant that banks became autonomous and whilst regulation also meant that interest rates were set by the Reserve bank, deregulation allowed the banks, independent of each other to set their own rates. Banks, like fuel companies, can do as they please and there's not a thing that anyone can do about it. When we are paying through the neck, banks claim that they have had to pay high rates for borrowings and the details are commercial in confidence. Interestingly, billions are held in cheque accounts which pay no interest and are charged fees. Banks budget for an amount of these funds to be always available yet we are never told about this "free" money nor is the benefit of this "free" money passed on to the customer. Is it time to bring back regulation?
KSS
17th Jan 2018
1:27pm
The trick would be to leave the loan where it is and move the savings account which is unencumbered with fees and charges.

If you are not prepared to reorganise direct transactions on your savings account then frankly you pay for the convenience.

As for the money sitting in cheque accounts earning no interest, that is an easy solve. Move it to an on-line account where you can 'pay anyone', arrange direct debits if you want, accept automatic payments etc AND get a better interest rate on the balance often accrued daily and paid monthly. You can keep the original account and just make an automatic payment to yourself just after receiving your regular payments (pension for example) leaving nothing more than a minimal amount of a few dollars. It really isn't that hard.

I suppose it is just easier for some to complain on a forum than actually take steps to use the system to their advantage.
Old Man
17th Jan 2018
2:32pm
Very droll KSS. I was pointing out when people want to move because their interest rate is high and they get a cheaper rate. How does that translate to leaving the loan where it is?

No matter how clever you are in organising a transfer of direct debits, there will still be a lag in time while paperwork is being progressed.

Most cheque accounts these days are used by businesses, not private people and my point is that all of these funds are used by banks as "free" money. Even if everyone left "a few dollars", there is still a large accumulation of "free" funds.
KSS
17th Jan 2018
2:52pm
I take the point about the 'free money' caused by the delay in moving funds around e.g. paying yourself from one account to another. However under the incoming NPP system those transfers will become immediate. Just don't make a mistake because the payments won't be caught up in the system, the money will be already deposited.
Rae
17th Jan 2018
1:15pm
Time to start moving money around. Setting up an introductory account provided there are no hidden drawbacks won't be hard.

The mutual banks are pretty good. Mine actually waived the $5 monthly fee for loyal customers recently.

I'm starting to lose all patience with this money grab everywhere and voting with my feet but also boycotting some of the annoying new market plots.
KSS
17th Jan 2018
1:16pm
I suspect the 'higher rate' for new accounts is just a honeymoon rate which will revert to the general rate of the day in a few months time. e.g. Rabodirect offer a new savings account rate of 3.05% for 4 months which reverts to 1.8% thereafter. It's a ploy to get new business. This was ever so!

The only solution is to stop showing loyalty and move your money around. Use on-line banks who offer better rates. Like insurance policies, if you have a set and forget mentality you will pay for it. This is not a new phenomenon nor the result of this particular Government.
Rae
17th Jan 2018
1:38pm
Yes KSS. I also have an account where I can purchase or sell share indexes and bond indexes or move into cash. The interest on the cash isn't anywhere near as rugged as banks are pulling right now as it's market based.

Banks can only compete because people are ignorant or lazy or fearful.

My mutual bank also offers a higher interest of over 3% in an account where regular deposits are made and no withdrawals. Excellent as a saving account.
JackandJill
17th Jan 2018
1:39pm
Been with NAB since 1980s. Had to pay a large deposit ($50k) to an account at another bank and was charged something like $35 to do it. I complained and was told I could have used other options (non of which fitted my timeframe) but included drawing it out and hand delivering it to the other bank. LOL!!!
The $s were eventually returned when a contract fell thru so I asked about Term Deposit rates. I was given a rate and I suggested that usually they can give a rate slightly above the daily rate. Teller agreed there was a higher rate but it was only available for 'loyal' customers. ???? Apparently a 30 year+ customer didn't qualify. Have moved accounts to another not so big Bank with very friendly staff who welcome you when you visit.
Hubby visited NAB to enquire re Term Deposit rates and asked for a better rate. Teller made a phone call to someone who pointed out that there was a better rate available. Oh yes, Teller hadn't noticed that one. POOR SERVICE, LACK OF EMPATHY AND OVERCHARGED - definitely time to move on.
KSS
17th Jan 2018
2:58pm
Just so you know for the future, NAB have introduced even international payments i.e. in currencies other than AUD, that you can do on-line yourself. The cost for that has also been reduced to $10 for international transfers $0 for Australian transfers.

The only other thing you may have to do is call them first so the maximum daily withdrawal amount from your account can be increased to cover the transfer.

Like you I had that experience in the past where the amount I had to transfer could only be done by going into the branch and then copping the fee for an over the counter transaction. Like you I whinged about it and they actually waived the fee!
floss
17th Jan 2018
1:42pm
Buy bank shares and put your dividends in a credit unions ,just my way of protest.
KSS
17th Jan 2018
2:59pm
Superfunds all invest in the banks too!
Gaby
17th Jan 2018
3:20pm
Why am I not surprised by the Banks action. They have always had 'carte blanche' to do whatever they wanted and there is minimal control by Government on the Finance Industry. Finally a Royal Commission but too little too late.
Rosret
17th Jan 2018
3:22pm
It is so low and unlivable on that using a saving account as an investment is a waste of time.Really a bank account is just a holding cache before it is spent.
Raphael
17th Jan 2018
5:00pm
Stick your money is a fire-proof safe and claim full pension
Knows-a-lot
17th Jan 2018
5:42pm
Basic rule. ALL BANKS ARE BASTARDS! The Royal Commission needs to be wide-ranging and have sharp teeth.


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