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The Forum > General Discussion > How to Beat the banks.

How to Beat the banks.

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What is to stop a bank advertising an interest rate of about 6%, then routinely adjusting it to 8.5% immediately after they have sold the product?

I suppose what I am asking is do they have to make interest rate changes accross the board? i.e when a bank lifts rates due to sub-prime, can it just change the margin on a subset of it's products? Possibly the ones that haven't been around for very long and have a 4 year deferred establishment fee and penalties? Or do they also have to lift the rate on the customers who would more likely leave?
Posted by Usual Suspect, Tuesday, 13 May 2008 2:42:56 PM
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I remember Paul Clitheroe saying years ago to enjoy the credit unions while they were still the good guys, because as they picked up more and more bank customers, they would become more 'corporatized' and go the same way.

He was right. The worst experience I ever had was with the largest credit union (in SA!) that went from being the best to the highest fee charging CU. in SA., under a Board...no! best not say anymore.
Even certain staff were arrogant and nasty. it was without doubt, the worst experience with a financial institution that I have ever experienced. Things were so bad that they had to bring in security guards to the AGM's, because people (inclusive of!) were getting on to the Mic and asking them just what the hell was going on.

I got such a run-around on one occasion that I sent them a hand-written account for all the phone calls;- they paid it!

I moved back to a bank,-and have had no further problems.................; until now? That bank is a subsidiary of one of the biggies in the merger.

Watching. Waiting.
Posted by Ginx, Tuesday, 13 May 2008 5:05:35 PM
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Usual Suspect,

Yes it is possible for the banks to attract you on one rate, then jack the rate up the day after your loan settles if it is a variable rate loan.

Not only is it possible, it happens. It is known in the industry as 'holding back'. If there are enough complaints, ASIC acts, but for the most part, borrowers cop it on the chin. When ANZ launched their non-bank solution called One Direct, they, and another non-bank lender were cautioned by ASIC about this deceptive practice. If you’re interested at all, you can read up on it here:

http://www.asic.gov.au/asic/asic.nsf/byheadline/06-388+ASIC+warns+lenders+about+misleading+ads+on+interest+rates

It is truly dodgy. Holding Back, along with many other questionable practices happen regularly without any backlash whatsoever. Unless the borrowers have the right helper on side, they often don’t even know they are being ripped off.

If the rate is variable, lenders can do what they like. Each lender responds individually based on what they think is right or what they think they can get away with.

Certainly some lenders have absorbed the increased cost of credit on some products, whilst passing it on for others. Similarly, some lenders have protected existing customers from increases and only passed increases on to new customers, however sadly, it is more often the reverse.

M
Posted by mortgageinsider, Tuesday, 13 May 2008 5:33:21 PM
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We truely need a a bank that is owned by the account holders.Banks in reality produce nothing.The RBA in conjunction with the World Bank creates the cash to match real economic growth.This makes them the gate keepers who capitalise on the hard work and creativity of others.

If the banking system was truely intelligent it would not have fallen for the sub-prime debacle in the US.If Banks cannot do the job that is defined by their charter,ie create stability and fairness in the financial system,then ordinary folk need to develop a system that is in their best interests.

We need a bank that is independant of both Govt and the greedy big boys.
Posted by Arjay, Tuesday, 13 May 2008 8:15:07 PM
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I hate to disappoint you Arjay, but you have just described a Credit Union.....
Posted by mortgageinsider, Tuesday, 13 May 2008 9:06:54 PM
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*We truely need a a bank that is owned by the account holders.*

That is probably already the case Arjay, for the big shareholders
in banks are in fact the super funds, who hold those shares on
behalf of Australian workers, as part of their super funds.
So if they screw you, you get it back in your super fund account.

Personally I found the best way of getting even with the banks was
to save my pennies, buy some bank shares and then let them send
me a cheque twice a year!

Australian banks can't really be blamed for the subprime crisis,
they are just caught up in it. I note the St George are paying
around 8.5% on money borrowed from Japan, then lending to housing
owners at 9.5%, not exactly a ripp off.
Posted by Yabby, Tuesday, 13 May 2008 10:18:07 PM
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