The problem with honeymoon rates – and beware this new scam

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Personal finance expert Noel Whittaker answers Joan’s query on chasing better-than-average bank interest rates and warns about yet another scam.

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Q. Joan*
I had my emergency funds in a savings account with one of the big four banks and I was getting 0.85 per cent. I saw other banks were offering 2 per cent for four months so moved it over. Can I keep doing this for a while or are there problems with that strategy? Should I move some into super? I’m 63 and working part-time.

A. The extra rates are just honeymoon rates, which means you need to go to all the hassle of changing banks every time you get a rate change. Given the small time frame, you may well decide is not worth all the effort. Don’t forget you could be losing interest when you move from one bank to another, and some of these honeymoon rates require you to make monthly deposits to keep the bonus rate. Always check the fine print. It’s always tempting to chase interest rates but the golden rule is, ‘If the term is short the rate doesn’t matter much’.

Since the pandemic began, reports of scam victims have increased by 55 per cent, and scammers have extracted more than $500 million from Australians in just the last four months.

And a word of warning on scams
Don’t think you are too smart to be caught. My friend Roger, a retired businessman, went to Harvey Norman recently to get himself a new photocopier. His requirements were that it could connect wirelessly and not cost an arm and a leg in supplies. After consultation, he settled on a Canon.

He was having a frustrating time connecting it to his wifi when a notice popped up on his computer screen purporting to be from Canon. It noted he was having technical issues, and suggested he ring a certain number so Canon technicians could sort out the issue as part of the after-sales service.

It seemed genuine, so he rang the number. It was answered by a non-Australian person who said he was part of the Canon technical team and would need access to the computer to connect the photocopier. Roger tells me that after an hour of searching in his computer the alleged technician said that there would be a $980 service fee. Roger was horrified and said he would have to think about it – the response was that it must be paid immediately.

Roger hung up and called Harvey Norman to complain about the audacity of Canon to charge an installation fee that was more than the cost of the photocopier. They were shocked – and gave him the genuine Canon phone number to ring to complain. You guessed it, Canon was horrified as well, but did mention that this was becoming a common occurrence.

And it didn’t end there. Roger’s computer had been hacked, which meant he spent the next two weeks cancelling credit cards, changing passwords, and advising everybody he dealt with about what was, effectively, a break-in.

Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. For more news and finance tips, go to noelwhittaker.com.au

*Not her real name

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3 Comments

Total Comments: 3
  1. 0
    0

    I am using one of the new online only micro banks, and could not be happier, nobody gives decent interest, but they offer far better than the rip off big 3 or is it 4.

    • 0
      0

      [email protected], that is exactly what people need to do – find an alternative. If people have cash sitting in a bank then moving it around for a better rate is a very easy thing to do. But like many things (insurance for example) people are frequently too lazy and therefore pay the price.

  2. 0
    0

    I moved some money to Macquarie for 4 months offering 2.65% before reverting to 1.35 which is still heaps better than the c/wealth bank 0.45%


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