The price of loyalty to your first bank

Font Size:

If you are hopelessly devoted to your bank, you probably won’t have your heart broken – as Olivia Newton-John sang – but you are at risk of being robbed blind.

Studies have shown that loyalty for life to one of the major four banks is burning an $80,000 hole in your pocket.

Comparison site Mozo, a regular advocate of shopping around to find a better rate from a smaller lender, estimated that customers of traditional banks who did not refinance loans wasted a whopping $17 million a year.

The founder of The Money Mentor Way, Nicole Pedersen-McKinnon, worked out three years ago that based on interest rates on credit cards, home and personal loans, a lifetime of sticking with your original bank was costing a customer an average of $82,174 – equivalent to the price tag of a luxury car.

Back then, Ms Pedersen-McKinnon claimed that the Big Four lured their unsuspecting customers early, while they were still at school, with schemes such as banking programs, online games and mobile apps.

And they are still at it. Earlier this month, consumer organisation CHOICE lambasted the beleaguered Commonwealth Bank of Australia (CommBank) for “flogging their products” in schools.

The bank was accused of offering incentives to primary schools that helped sign up students to its Dollarmites program.

Shortly after the airing of its latest dirty linen, CommBank decided to withdraw the ‘kickbacks’ from next year.

“We have heard CHOICE’s concerns about these payments and will engage with the schools, parent and citizens’ associations and consumer groups to introduce a change to the way payments are structured from 1 January 2018 that no longer links the payment to the value of students’ deposits,” the bank said in a statement.

CHOICE linked the payments to schools with subconsciously encouraging students to become complacent about reviewing banking options as adults, which led many to stay and pay higher interest rates than they needed to later in life. 

CHOICE’s chief executive, Alan Kirkland, inferred that the Dollarmites program was disguised as a marketing tool to gain “unfettered access” to “flog their products” in schools.

“Rewarding children for saving with cheap toys easily transitions to rewarding young adults with ‘special’ offers of high-interest personal loans and credit cards,” Mr Kirkland said.

“It is time to take banks out of financial literacy education, and to stop them from paying schools commissions to flog their products.”

Comparison sites encourage all bank customers to review their accounts regularly in case they can get a better deal elsewhere. Some of these sites are canstar.com.au, mozo.com.au, infochoice.com.au and finder.com.au.

Are you still a customer of the original bank you chose? Have you switched banks? If so, why did you decide to swap?

RELATED LINKS

Big Four banks scrap $500 million in ATM withdrawal fees

Australia's Big Four banks to scrap $500 million worth of ATM fees.

Congratulating you for using ATMs is downright patronising

Are you tired of organisations congratulating you for being able to use technology?

CBA releases list of regulatory ‘issues’ – are you a victim?

Commonwealth Bank announces refund program for customers and staff.

Written by Olga Galacho



SPONSORED LINKS

Sign-up to the YourLifeChoices Enewsletter

continue reading

Food

Woo an Icelander in an Italian restaurant if you want a long marriage

"There are three kinds of lies: lies, damned lies, and statistics." Remember that phrase? Given the battering the truth has...

COVID-19

How one aged care provider beat Australia's slow vaccine rollout

Australia's progress in vaccinating some of its highest-priority citizens has been slower than anyone wanted, but one Melbourne aged care...

Lifestyle

'Super plants' could help reduce air pollution in your home and garden

We all know about poor air quality in towns and cities, what with traffic, lack of green spaces and gardens...

Food and Recipes

Flatbread Pizzas with an Asian Twist

Invented by Nepalese chef Rachana from Eat Offbeat, the New York catering company that employs refugee cooks, these mini flatbread...

Wellbeing

Wellness technique actually makes us selfish, say researchers

Mindfulness has been the new black for much of the past decade. It's a buzzword bandied about to promote self-awareness,...

Health Insurance

Ageing baby boomers are missing out on health cover savings

Most older Australians see their health insurance premiums rise every year but don’t realise these high costs can be for...

Travel News

Vaccination no guarantee of open borders, says health minister

Australia's international border could remain closed even after the vaccination rollout is complete, according to health minister Greg Hunt. As...

Travel & Motoring

Are 'smart' cars creating dumb drivers?

The prevalence of driver aids is increasing all the time, even into lower priced cars. Cameras and sensors can alert...

LOADING MORE ARTICLE...