Time to Switch Banks

Banks and credit unions are currently offering their products at really competitive rates. This is a result of government reforms combined with the slow market activity which has caused a stiff competition between financial institutions. On the other hand, now would be a good time for consumers who are unhappy with their bank’s service and rates to move on and switch to another bank.

Opening a bank account can be challenging enough as it is, with different requirements needed, just so a consumer can make a bank look after their riches. Transferring banks may seem worse but not at the moment, as a matter of fact, changing banks now is easier than ever. As the Australian Government reforms start to hype up competition in the banking industry, discount-rate mortgages and good enough low-fee bank accounts are popping up here and there.

“More than half of the people (52 percent) surveyed who undertook switching banks this year said the experience was easy,” the spokesman for the consumer association Choice, Christopher Zinn said. “Tick-and-flick reforms to make switching banks very straightforward are coming in about six months but even now people are reporting that they are surprised by how easy it is. That’s good because many people think it is not worth the hassle … because they are basically the same.” Choice just revealed their 2011 Bank Satisfaction Survey.

The mortgages and loans market have spread out due to the recent drop in official interest rates. To pick up estranged bank borrowers, a number of lenders are cutting variable mortgage rates. And with a range of high interest savings accounts and term deposits, savers who are ready to shop around can lock in rates of more than 5 percent.

Along with rules that force banks to help customers switch accounts, such as providing a list of all direct debits for the past 13 months, better loan products are also providing an incentive for customers to shop around. “That’s good because many people think it is not worth the hassle … because they are basically the same,” added Zinn.

Even credit cards have experienced a revamp in their offers and deals to boost consumer activity. There are currently two interesting offers, Virgin Flyer and BankWest Breeze Mastercard. Virgin Flyer is offering 1.9% for 12 months reverts to on balance transfers whilst the BankWest Breeze Mastercard offers 10.99% p.a. on purchases.

For frequent flyer programs, the Jetstar Dollars Platinum Mastercard provides the least amount spent to earn enough points for a return economy Brisbane-Sydney flight. According to Canstar’s Financial Analyst Adam Beu, rewards cards are a little bit complex. Cardholders must know what kind of spender they are to be able to link up with the right rewards program and be able to maximise its benefits.

Canstar reported that on a Jetstar Platinum Card, spending $5,900 will earn a return trip to Sydney, however, there is an annual fee of $0 annual fee for the first year ($149 thereafter) and interest rate of 19.99% p.a.

Meanwhile, to receive free flights from Qantas and Virgin-linked frequent flyer credit cards, cardholders are required to spend somewhere between $10,000 to $12,000. “If you spend less than $12,000 a year, or can’t pay off your balance every month, chasing high-flying rewards may be futile,” Beu commented. There are approximately two-thirds of credit cards with points-based rewards programs linked to it and about 15 percent give away instant rewards program and to ensure receiving the promised rewards, make sure to always repay bills on time and in full.

Credit Card Offer Comparison

		Interest Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual Fee	Cash Advance Rate (p.a.)
Bankwest Breeze MasterCard	A low interest rate on everyday purchases with a low balance transfer offer	0% for 4 months (reverts to 11.99% )	0% for 6 months	$59	21.99%
Citibank Clear Platinum Card	A low interest rate offer on balance transfers and purchases	0% for 6 months (reverts to 11.99% )	0% for 6 months	$49 annual fee for the first year ($99 thereafter)	21.74%
St.George Vertigo	An introductory offer on balance transfer and a low annual fee	13.24%	2.99% for 6 months	$0 annual fee for the first year ($55 thereafter)	21.49%
Virgin Australia Velocity Flyer Card	Earn 1 velocity point per $1 spent, plus an introductory offer on balance transfers	20.99%	2.9% for 6 months	$129	20.99%
Westpac 55 Day Credit Card	No annul fee for the first year with a low rate on balance transfers and purchases	0% for 5 months (reverts to 19.59% )	0.99% for 9 months with 1% handling fee	$0 annual fee for the first year ($30 thereafter)	21.49%