Saturday, April 18, 2009

Fight night!!! Which bank will win???

Banks are an unusual breed. They love their food (read:money), grow up very quickly and then often bite the hand of the ones that feed them. Yet, somehow mysteriously, the bitten return once again, they get bitten again and so on and so on, until the relationship breaks down and someone loses an eye.

Banking has come a long way, but unfortunately, so has the weird and wonderful tactics they come up with to get you to part with your cash. Application fees, account keeping fees, fees charged to administer a fee, and finally, who can forget the fee that was created so that you can have a fee free account. The news isn't all bad though and I must admit, sometimes it seems like the banks are ACTUALLY trying to help you make money, but this is rare...

So what can you do to get yours back? What can you do to bite them (a little anyway)?

Luckily for us, there are many banks out there. In Australia, we are especially lucky, because we have the very stable Major 5 (ANZ, Westpac, Suncorp, NAB, CBA) and some secondary options as well (Bank of QLD, Bendigo and RAMS to name a few). Here is where the fun begins. All of these guys have wonderful products and for a long time, I stuck with ANZ with their "$5 account fee for not having any other fees" account, which was working well for me, especially because in my snobby little mind, I was too lazy to search for ANZ ATMs and wanted fee free access to all ATMs. While this was working fine, it was still $60/year they were pulling from me. Before this, I had multiple bank account with different banks and union societies. Why? Who the hell knows, but it seemed right at the time!

Now that I have realised I want to make cash flow positive income decisions, I have made a few decisions about how I structure my accounts to pay virtually no fees. 

So what can you do?

If you have a mortgage, easy, most offer fee free banking for you. If you are one of the unlucky ones that does not have a mortgage, sometimes the Major 5 have what I call "minimum balance bait" accounts, where you don't pay account fees if you have lets say $5000 sitting in there. These are quite OK, but once again, only if you are using this to disperse the additional cash into other cash flow producing online savers. 

Shop around, let the banks "fight" for your business. Don't be happy with a 0.01% interest on an account just because you wanted a blue card from ANZ, make decisions that start putting money into your pockets, not the bank's. Sometimes in their wisdom, banks lure you in with additional little bonuses, like a wonderful pocket to put your cards into, filled with useless, tree wasting pamphlets, but stay away....glossy equals money.

Also keep in mind how you use your money. A while ago, I made sure I had an overdraft facility, because my then cash flow dictated the need and indeed the one fee I paid for this, paid itself off numerous times when I had to access the facility. Not all fees are bad (dare I say it), the key is the overall net cash flow position that you will be in.  

I am not going to say go for this account, or go with that bank, but what I will say is go to ALL of them and let them earn your business. They make trillions, they can give something back...

Finally, products change. Banks decide to get rid of certain accounts, or shock horror, something better is invented by one of the other banks. Keep vigilant, keep updated.    

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